Scott Letourneau presents strategies for Amazon FBA sellers who are behind on sales tax reporting and remittance. He discusses determining which states you have nexus in based on inventory locations, calculating how much tax is owed, and options like applying for past due permits and paying owed taxes/penalties or pursuing a voluntary disclosure agreement to waive penalties. Letourneau recommends services from Taxify to pull sales data and file returns, and from Sales Tax System to apply for permits going forward to help sellers get into compliance and move past due tax obligations.

1. G u e s t s p e a k e r S c o t t L e t o u r n e a u , S a l e s T a x S y s t e m
H o s t J o r d a n B l u h m , T a x i f y b y S o v o s
Taxify.co June 15, 2017
Webinar: Catch Up Don’t
Give Up – Getting Current
With Sales Tax Reporting
and Remittance

2. Scott Letourneau presents…

3. Behind on Sales Tax for Amazon FBA Sellers
1. Sales Tax Nexus Review
2. Sales Tax Decision
3. Behind on Sales Tax Best Options
4. Remitting Sales Tax
5. Resources
Today You Will Learn…

4. Sales Tax Review
• What is Sales Tax?
• Tax that is Added to the Price of Goods
• Percentage of the Purchase Price (5-8%)
• Collected by the SELLER (that is YOU)
• You are an UNPAID Collection Agent
• You REMIT (Give Back) to the State/County/District/City

5. States with Sales Tax
• 45 States (and D.C.)
• 5 States with NO sales Tax
• Alaska
• Montana
• New Hampshire (FBA)
• Delaware (FBA)
• Oregon

6. • 26 FBA States- CO most recent (plans for more)
• But Only 25 Charge Sales Tax (Michigan not FBA)
• Delaware and New Hampshire have NO Sales Tax.
• Challenge…
• Your Stock/Inventory MOVES Around to Different FBA States
• More States to Register for Sales Tax
• Apply for Sales Tax Permits
FBA States

7. Nexus & FBA Example
Stock/Inventory in 5 FBA
States
• Nexus in 6 states = LLC State + 5 FBA States
• Nevada is FBA State /Wyoming is Not
LLC State of Formation

8. • It is a Cash Flow Decision
• Why?
• Each Day that Goes by
• WITHOUT Collecting and Remitting…
• You are Paying Sales Tax OUT of YOUR OWN POCKET
• Fast Building Debt
• Question Becomes
• When Can You Afford to Pay?
Sales Tax Decision

9. Behind on Sales Tax?
• Never Collected AND Remitted Sales Tax?
• Good News
– This is Very Common Starting Out
• Bad News
– Not Getting into Compliance ASAP is a Bad Idea
• Why?
• Paying Sales Tax Out of Your Own Pocket
• PLUS Penalties & Interest

10. Every Day That Goes By…

11. Sales Tax Penalties & Interest
State Gross
Sales
Sales
Tax Rate
(avg.)
Sales Tax
Owed
Interest
(avg.)
Penalties
(max)
Total Sales
Tax Plus
Interest &
Penalties
Arizona $5,000 8.5% $425.00 3% 25% $544.00
California $5,000 8.5% $425.00 9% 10% $505.75
New Jersey $5,000 7% $351.40 7% 30% $481.42
Texas $5,000 8% $401.60 8.25% 10%* $474.89*
*(plus $50 per return)

12. Behind on Sales Tax Strategies

13. 1. Apply for Permits –Past Date
• You will pay sales tax + penalties + interest +
submit sales tax returns
• Start Date Determination on Application
• TWO PARTS
–FIRST had Stock/Inventory AND
–FIRST Sale within the Same State
= Start Date for Your Sales Tax Owed

14. 2. Voluntary Disclosure Agreement
• VDA
• States will WAIVE Penalties
• Possible Reduction of Interest
–Interest Range: 3-18%
–Penalties Range: 10-30%
• Look Back Period Limited to 3-4 Years
– Nevada 8 Years | Texas 48 months (abate both penalties and
interest)
• State will Issue You a Sales Tax Permit

15. 3. Form a New Entity
• Don’t have the cash flow for past sales tax due + penalties + interest?
• Looking to move forward and pay future sales tax
• Form a new business structure, EIN and bank account
• Update Amazon Seller Central
• Amazon Verification Process
• Apply for Sales Tax Permits Under New Entity
• Update Amazon Seller Central with Sales Tax Permits
• Set up Tax Accounts at Each State
• Collect and Remit Sales Tax Moving Forward
• KEY POINT: Company MUST be SEPARATE from Previous
Company
• Still Need to Pay Past Sales Tax - YES

16. 4. Collect Moving Forward
• Using a Current Start Date
• NOT RECOMMENDED
• Same business structure
• Apply for permits with current start date
• Collect and remit sales tax moving forward
• Hope you don’t get audited on past sales tax
• BIG PROBLEM
• If caught, the state will ADD 50%+ FRAUD PENALTIES to
What You Owe!
• Signing a sales tax return under Penalty of Perjury!

17. Let’s Dig Deeper
Behind on VDA

18. VDA Considerations
• Cash Flow
– Complete Sales Tax Returns & Pay Back Sales Taxes within 60-90
days
– States with Payment Plans: California, Florida, Illinois, New York and
Texas
– 25% down and 24 months of payments (in general)
• Volume of Sales
– Slow- no big deal…
– Fast – Concern
• Amount Owed in Sales Tax
– Arizona over $500 and Indiana over $1,000 (to file VDA)

19. VDA Anatomy
• Process & Time Frame: 2 weeks to 60 days
• Response Time: 30 days to 45 days
• You are NOT eligible for a VDA:
–Already contacted by the state
–Under an audit (for that state)
–Already registered for a sales tax number

20. VDA Fees
• Done For You
• If Owe More than $3,000 in PENALTIES (10-30%) or More
• MAY Considering Hiring SALT Expert:
• Fees based upon:
– Complexity of the state process, your data being updated, time to prepare
– Range from $1,000 to $3,000 PER STATE
• Do It Yourself
• If Owe a Lesser Amount in Penalties
• Reach out the states yourself
• RISK: States may NOT agree for a VDA

21. Your Decision Process
• Gather Your Sales Tax Data
• Determine First Stock/Inventory & First Sale After
• Pull Past Transactional Data from Taxify
• Determine Past Sales Tax Owed
• Calculate Past Penalties + Interest (Average 20-30% of Sale
Tax Owed)
• Determine Your Cash Flow Required
– Overall and Top Sales States

22. Remit Sales Tax
Effortless Sales Tax

23. Behind Summary Options
• 1. Apply for Permits with Past Start Date
– Pay sales tax + penalties + interest + any late fee on past sales tax
returns
• 2. VDA Route to waive Penalties
• 3. New Entity
– Apply for Permits Moving Forward
– Past Sales Still Due
– Must be a Separate Entity

24. Resources
• Sales Tax System
– Sales Tax Permits Made Easy for Amazon FBA Sellers (DIY and DFY
options).
– $597.00 for 12 month membership access to our $75 per state permit
service
– Taxify.co members 10% discount: http://budurl.com/STSTaxify
– Learn more: SalesTaxSystem.com
• Entity Formation (U.S. or Foreign Sellers)
– NCP (sister company with Sales Tax System)
– Incorporate in all 50 states (experts with foreign sellers)
– support@launchwithconfidence.com
– Learn More: www.LaunchWithConfidence.com

25. Remit Sales Tax
Effortless Sales Tax

26. Behind on Sales Tax for Amazon FBA Sellers
1. Determine States with Stock/Nexus
2. Determine How Much You Owe
3. Strategy Decision to Move Forward
4. Taxify.co to Pull Data and File Returns
5. Sales Tax System to Apply for Permits
Move Forward with Confidence

27. Thank you for attending!
Scott Letourneau
Sales Tax System or NCP (Entity Formation)
support@SalesTaxSystem.com
Jordan Bluhm
Taxify.co
hello@Taxify.co
Get your free trial of Taxify:
http://go.taxify.co/Taxify-Trial.html