California Offering Sales Tax Relief for Amazon FBA Sellers
Sales Tax Relief Available for Amazon FBA Sellers
What Happened: California has rolled out a limited-time program that “forgives” unpaid sales tax prior to April, 2016 if they register and apply for the program in the next 60 days.
Why It Matters: Depending on your situation, you could save tens (or hundreds) of thousands of back sales tax liabilities. It won’t get any better than this.
Who Qualifies: Online sellers that don’t have a sales tax permit, or were not registered prior to December 2018 AND whose only presence in California was due to third-party fulfillment centers (such as Amazon FBA warehouses).
How to Take Advantage: Schedule a free initial consultation with our team. We can help determine if you qualify for the program and take action on your behalf.
Up until now, there was no look-back period relief for sellers who received the letter. Options were limited to a managed audit or a 1032 program. The managed audit waived 50% of interest and the penalty and the 1032 program just the penalty. However, in both programs, you had to pay back tax to the day your inventory first appeared in an Amazon warehouse in CA.
A VDA which limits the lookback period to 36 months was not available to anyone the state had already reached out to. This new legislation now allows sellers to participate in a program much like a VDA. The new program limits the look-back period to April 16th, 2016 which is approximately 38 months.
In order to qualify for the new program, a seller must register within the next 90 days and pay the amounts due or enter into a repayment agreement with the final payment being no later than 12/31/2021. The penalty is waived. The seller must also not have registered with the CDTFA prior to 12/1/2019.
While this is not the news that many were waiting to hear from the Governor, it is better than having to pay back taxes all the way back to 2012 when the CA warehouse opened. My sources tell me, that CA plans on turning over sellers who have not complied to audit after the 90 day period expires.
Note: To qualify for relief under Revenue and Taxation Code section 6487.07, a “qualifying retailer” you must file completed tax returns for all tax reporting periods for which a determination maybe issued under section 6487.07, by September 25, 2019, and either pay in full the taxes due or apply for an installment payment agreement, but only if the final payment due under the terms of that installment payment agreement is paid no later than December 31, 2021.