Table of Contents
The Risk of "Physical Nexus": The Inventory Problem
The biggest tax issue for FBA sellers is Physical Nexus. In the U.S., "Nexus" is the legal link between your business and a state that forces you to pay taxes there.
Storing inventory in a state—even in a warehouse you don’t own—usually creates a physical nexus. Because Amazon moves your products between different warehouses across the country to speed up delivery, you might accidentally create a tax obligation in dozens of states.
Many foreign companies make the mistake of thinking they only have a tax duty in the state where they incorporated. This is not true. You must track where your inventory is stored within your Amazon Seller Central account to know exactly where you need to register for sales tax.
A Helpful Rule: Marketplace Facilitator Laws
There is some good news. Most U.S. states have passed Marketplace Facilitator Laws. These laws make the process easier for small and international sellers.
Under these rules, Amazon (the "facilitator") is responsible for calculating, collecting, and sending sales tax to the state for you. In states where these laws exist, your company may not need to register for sales tax for your Amazon sales. This removes a lot of paperwork.
However, this does not solve everything, especially if you sell through more than one website or platform.
The Danger of Selling on Multiple Platforms (Omni-Channel)
The situation becomes much more complex if you use Omni-Channel Selling. This means selling through FBA while also selling on your own website (like Shopify), through direct sales, or via wholesale.
If you have inventory in an Amazon warehouse in a specific state, you have a Physical Nexus there. Because of this connection, the state may no longer view you as a "remote seller." This means:
- Amazon collects tax for sales on Amazon.com.
- You must collect and pay tax for all sales made through your own website to customers in that state.
Protect Your Business Growth
Using Amazon FBA is a smart move, but you must manage the tax risks. If you ignore these rules, the money you save on logistics might be lost to tax penalties.
TABS is your all-in-one partner for managing back-office tasks. We specialize in helping European businesses navigate the U.S. sales tax system. We recommend discussing your specific sales plan with our tax team to ensure you are fully protected.
About the author
Laura Hoogendoorn is the Director of Human Resources at TABS, where she leads the company’s HR strategy and oversees operations across the Houston office. She focuses on building strong, people-centered foundations that enable both clients and teams to thrive as they navigate U.S. business expansion.
Disclaimer: This article provides general information and does not constitute legal, tax, or accounting advice. To evaluate your specific situation and ensure full compliance, contact TABS today. We will assess your equity plan, handle all operational execution, and connect you with the appropriate specialized U.S. tax attorneys and CPAs within our trusted network.
