Amazing FBA Amazon and ECommerce Podcast, for Amazon Private Label Sellers, Shopify, Magento or Wooc

Amazing FBA Amazon and ECommerce Podcast, for Amazon Private Label Sellers, Shopify, Magento or Wooc


Q & A Tuesday: Sales Tax for Foreign Amazon Sellers

July 03, 2019

Guys, Tax question from a foreigner

I've got LLC registered in Dеlaware and I've talked to CPA, EA, and one consultant.
CPA told me I shouldn't file 5472, EA told me I should.
CPA and consultant told me file 1040NR, EA told me I shouldn't.
I've paid 250$ commission to the consultant but I started to doubt his knowledge.
Who should I listen to?
Should I fill 5472?
Should I fill 1040NR?
How do you deal with your taxes?
Thank you

This is an excellent question.
I've JUST interviewed Paul Rafelson, an expert tax lawyer., We've got an episode coming out soon on the new podcast (10K Collective Podcast). The episode is due to go live in about late July. But if you'd like early access, email me and we may be able to sort it out.

Obviously to answer a Q like that properly implies knowing multiple things, most important being: Are you selling only on Amazon? (What level of revenue? is also important but a broader Q)

Have you already registered for sales tax? It's hard to give advice without specifics but the simple summary of Paul's advice around sales tax was: DON'T REGISTER FOR ANYTHING if you're only selling on Amazon.

I'm not a tax lawyer or any kind of lawyer and there are many who would disagree. I'm just passing on what I understood from the interview.

Get in touch and I can put you in touch with Paul if you want to explore further.
michael@amazingfba.com
I have no affiliate deal and no strong opinion either way as I'm not claiming sales tax expertise.
Handling the Big Three threats to Amazon sellers: Trump Tariffs, Sales Taxes and Brexit
It is tempting to lump together the three big threats that e-commerce sellers are aware of, at least the ones that I speak to in the UK.

However, it's interesting that whilst they have similarly far-reaching and scary consequences, the nature of each one of them is I believe entirely different. I think they are worth comparing and contrasting.
Trump Tariffs
Having been speculative for a long time, and with a lot of uncertainty around them, now at the time of recording that is on the 23rd of June 2019, it seems that Trump import tariffs of 25% are present on many many products being imported from China. So in a sense, this is a very simple thing to deal with: you just need to check whether your products are liable, and if they are, unfortunately, for now, you simply pay the tariff.

Of course speculating about whether or not the tariffs are here to stay, and if so for how long is very difficult. Also, it is difficult to judge whether the further $300 billion worth of products will be taxed as Trump has threatened, and again if that does happen, how long that will last or whether it will be repealed quickly.

However, the current situation is at least know.
Brexit
Brexit it is a strange opposite in that it has been quasi decided at least by referendum – I am aware that in British politics this is not simple, but I'm simplifying –but no action has happened. Again trying to predict the future and see when Britain might leave, whether it won't be hard bricks it, some kind of agreed X it or indeed whether Britain and staying in the EU, is a very speculative thing again.

However, the risks to Amazon importers from China are much clearer and I believe that the mitigation strategy is pretty straightforward. If you sell intercontinental Europe and the import from China into the UK, the obvious risk is that you will not easily get good out of the UK into Europe. And I believe the solution is pretty simple: create a subsidiary company which under EU law you currently can do in the relevant country in Europe where you get the majority of your sales, probably best to do it in Germany, but to be honest you should be up to import into anyw...