COLVIN + HALLETT BLOG

Amazon Seller Using Amazon Fulfillment Center? You May Be Receiving A Washington Department of Revenue Questionnaire Soon

by | Oct 10, 2017 | Washington State Tax Audits, Washington State Tax Appeals

In the last few weeks we have received calls from several companies that have received Washington Business Activity Questionnaires regarding their affiliation with Amazon fulfillment centers.  We believe the Washington State Department of Revenue (DOR) may have opened a project targeting out of state vendors who may unknowingly have Washington contacts through fulfillment centers located in Washington.

What is a Washington Activities Business Questionnaire? This is a form the DOR often sends to businesses at the beginning of an audit to determine the amount of Washington sales that could potentially be subject to Washington sales tax and Washington Business & Occupation tax.

Why would Washington DOR target Amazon sellers?  Sellers are responsible for collecting and remitting sales tax to states in which it has “nexus” or is subject to tax on items sold on-line through the Amazon site.   Typically on-line sellers are not responsible for collecting or remitting sales tax to Washington if they do not have “nexus,” or a connection to Washington, i.e., they have no employees, business operations, sufficient economic nexus, etc. in Washington.  However, it appears the DOR may be taking the position that if the sellers store goods in an Amazon warehouse in Washington, this may be a sufficient connection to Washington to subject them to tax.  At least it appears that the DOR is looking for and targeting sellers in this category—and the only reason to do so is to collect revenue.  

What to do?  If you have received a Washington Activities Business Questionnaire or have otherwise been contacted by the DOR, you should seek assistance in answering the questions and understanding the unique state tax regime in Washington.  We often see businesses who have answered these questions without fully understanding the law and have unintentionally inaccurately answered the questions, sometimes even overstating their Washington sales.  It’s important to determine if you have any defenses to tax liability in Washington.  If you have not yet received a Questionnaire, you should determine whether you may be subject to tax in Washington, and if so, could consider the Department of Revenue’s voluntary disclosure program.  

 

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