Table of Contents
- 1 What Is Amazon’s Tax Exemption Program?
- 2 What Does It Mean to Become Amazon Tax-Exempt Business?
- 3 What Are the Benefits of AMZ Tax Exemption?
- 4 How to Get Tax Exempt on Amazon?
- 5 How to Set up Tax Exempt on Amazon Properly
- 6 How to Use Tax Exempt on Amazon?
- 7 How Does ATEP Work with Refunds?
- 8 What Happens If Amazon Merchants Do Not Follow Tax Policy?
- 9 What to Remember: Amazon Tax Exemption Program (ATEP) Enrollment
Amazon’s owner Jeff Bezos is one of the richest people in the world, and he started his company in a small garage! Now, AMZ merchants and other e-commerce vendors sourcing goods for the marketplace have turned their side hustles into prosperous companies. However, with any business success come taxes. As such, we will use this blog post as a guide to becoming and staying Amazon tax-exempt.
You have worked hard to develop a successful AMZ sales platform. We wish to help you keep as much of your proceeds as possible. Thus, we will explain the Tax Exemption Program and show how it can benefit your business.
What Is Amazon’s Tax Exemption Program?
The AMZ Taxation Exemption Program (ATEP) is developed to help merchants and other digital entrepreneurs on the platform comprehend their taxation obligations. This option provides info on sales, use taxes, and Amazon seller commissions.
If you are an AMZ merchant or are going to source goods for the marketplace, it is vital that you know ATEP and how to apply for the AMZ tax-exempt status.
What Does It Mean to Become Amazon Tax-Exempt Business?
When a company gets its tax-exempt status, it has to showcase a certificate proving it. Getting such certificates from each tax-exempt customer poses a huge administrative challenge to AMZ sellers. As a result, the platform developed its Amazon Tax Exemption Program (ATEP). The platform will automatically manage all client sales taxes exemptions if a merchant enrolls in this program. For instance, the company will get and store all client exemption documentation per order. And AMZ tax-exempt merchants can check this info via their Tax Document Libraries whenever needed.
Besides, Amazon’s tax exemption solution helps merchants who wish to become tax-exempt. Once enrolled in ATEP, the marketplace will automatically deliver your tax-exempt certificate for orders from other AMZ merchants. It further lowers your administrative burden as a merchant, saving you a good deal of money. The marketplace will automatically share your exempt certificate if you buy inventory from program members.
Thus, by participating in ATEP, merchants save much administrative effort and time. Instead of collecting tax-exempt certificates from each customer, the platform does it automatically. When purchasing inventory, you will not need to manually share your certificates with fellow ATEP participants. It lets AMZ tax-exempt users concentrate on what matters – generating sales.
What Are the Benefits of AMZ Tax Exemption?
Being an ATEP member can save your online business a lot of money. The platform won’t charge you the sales taxes it charges from customers, which can be huge depending on your location.
For instance, if AMZ charges a customer in California state sales taxes, but the merchant is exempt as they’re based in another state, the platform will reimburse the sales taxes to this seller.
Moreover, the marketplace doesn’t charge taxes on your purchases. As a result, it can indicate considerable money savings, especially when you purchase a lot of inventory from AMZ or other AMZ marketplace merchants.
Think of trying to get individual tax-exempt certificates from all your clients. Such an undertaking might create a real administrative nightmare and require extra business resources. Luckily, AMZ can do this on your behalf if you participate in the Amazon Tax Exemption Program (ATEP).
Thus, below are several perks of the Tax Exemption Program, including:
- Eliminated or reduced state use and sales taxes on AMZ purchases.
- The platform collects no sales taxes on items sold by Amazon.
- Lowes Amazon selling fees.
You might be paying more than required in Amazon selling fees by failing to get an Amazon tax exemption if your company qualifies for it. However, checking whether your business is eligible for an AMZ tax exemption and enrolling to get such a status is effortless.
Some merchants may even get taxation exemption status fifteen minutes after applying if they have all the needed information.
How to Get Tax Exempt on Amazon?
Before you can apply for ATEP, it is critical to check whether your company is eligible. Not just any seller qualifies for Amazon’s tax exemption. Below are the main types that can participate in the program:
- Educational Institutions
- Government Organizations (Local, State, or Federal)
- Non-profit Organizations
- Direct Payment Holders
Most Amazon merchants won’t fall into any other category other than resellers. Nonetheless, you may check out the entire list of tax-exemption codes.
When you register as an AMZ FBA seller, you are likely to be automatically enrolled in ATEP as soon as your tax settings are finished. However, it will only help you process tax exemptions from other clients.
You should complete the registration procedure if you wish to register for the program as a buyer (for resale products). It will require you to provide the following details:
- Business entity info
- Personal info
- State in which you’re enrolling
- Business address
- Exemption forms/numbers (it may vary depending on the state you’re registering in)
You may find the opt-in for the program within your AMZ Seller Central profile. Just go to the “Tax Settings” tab of your account, and check on the “Amazon Tax Exemption Program” box. To sign up as a buyer, go to your “Account Settings” section and choose “AMZ Tax Exemption Program.” Then, follow through with all the easy-to-manage guidelines!
You will complete the enrollment, sign the terms and conditions, and start making purchases absolutely free from sales tax! This process will take less than a half-hour to complete. However, in rare cases, the application procedure will take up to 24 hours while AMZ waits for the local taxing authorities to confirm your application.
How to Set up Tax Exempt on Amazon Properly
Sometimes brands apply for their ATEP status incorrectly. Broadly speaking, two main categories of issues occur. Either 1) the tax-exempt status was not used when it should have been, or 2) the status was applied when it should not. To fix these issues, ATEP participants should take one of the actions below:
- Tax-exempt status was not applied when it should have been: If you do not apply your status to the qualified purchase, you may email AMZ directly for a sales taxation reimbursement.
- Tax-exempt status was applied incorrectly: When you apply the exempt status to an order that does not qualify, you will have to pay use taxes on such items.
How to Use Tax Exempt on Amazon?
When selling on AMZ Business, you might be able to qualify for AMZ Tax Exemption Program. Amazon merchants who participate in this solution will get automatic management of tax exemptions. Such automatic handling means collecting client exemption documentation and storing documentation in Amazon’s system, which is available via a seller account. Moreover, buyers can filter their search results with merchants who accept or do not accept this taxation exemption.
How Does ATEP Work with Refunds?
When it comes to Amazon FBA, when a client requests a refund, the platform makes a refund of taxes on FBA purchases. The tax will be returned only if the platform gets supporting exemption documents, which you may find in your Tax Document Library. In turn, for merchant-fulfilled transactions, you may offer tax returns based on the order at any time.
What Happens If Amazon Merchants Do Not Follow Tax Policy?
Although getting a tax-exempt status for your company is great, you have to follow all rules carefully to avoid any negative consequences.
For instance, you can face account suspension when caught selling taxable products on Amazon.com without the platform’s tax-exempt status.
It’s necessary to follow AMZ rules and guidelines for the Amazon Tax Exemption Program to continue benefiting from its benefits.
You will also wish to avoid making personal orders using your tax-exempt AMZ profile. If you purposefully or accidentally do this, the marketplace may remove the tax-exempt status.
What to Remember: Amazon Tax Exemption Program (ATEP) Enrollment
ATEP is an outstanding opportunity for Amazon merchants for their buying and selling capacities. As a merchant, the program saves you the headache of obtaining every tax-exempt client’s certificate. As buyers, it automatically uses your tax-exempt status on qualifying orders, saving you unnecessary sales taxes and time. If you are an AMZ seller and purchase goods for resale via the marketplace, you need to participate in ATEP.
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