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I have an Australian ecommerce website for US customers and will drop ship goods within USA - and also use FBA (Fulfilled By Amazon) to store and ship. Do I need to incorporate in USA and register for tax?

Full Question: I am setting up an ecommerce website for US customers and will drop ship goods within USA. We are physically located in Australia whilst our multiple suppliers and customers will be in various US states. We also intend to use FBA (Fulfilled By Amazon) to store and ship some goods. Is it necessary I incorporate in the USA and register for tax? Am I obliged to charge tax on my customer sales in any states? Thanks :)

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Answer:

Diane Yetter photoThe question as to whether you are required to register or incorporate in the USA is a question that you will need to address to your legal counsel as that is beyond the scope of our expertise. The question as to whether you will be required to charge sales tax will depend on the contractual relationship you have with Amazon for their services. If you are deemed the seller and Amazon is the fulfillment agent, Amazon may create nexus for you if they are operating on your behalf. This could then require you to charge sales tax. If your suppliers are shipping goods to an Amazon warehouse and invoicing you for the goods, if they have nexus in the state where they are shipping the goods to, they may be required to invoice you sales tax if you can not provide them a valid certificate of resale. States vary on what would be acceptable as a certificate of resale. Some states would require you to be registered in order to issue a resale certificate while others maybe accept proof that you are a seller in Australia. For more information on drop-shipments, please consider our Tax Implications of Drop-Shipments Webinar or the book we wrote (published by CCH) Drop Shipments: Taxation, Compliance and Planning. If you need further assistance with this matter, please feel free to contact us directly.

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