Sales Tax Law with Paul Rafelson of eCommerce Attorneys - a podcast by Michael Veazey

Sales tax law with Paul Rafelson of eCommerce Attorneys part 1

What is happening with Sales tax law - simple summary?

It’s been a developing issue of last few years. Sales tax law has been a driving issue of life being difficult for e-commerce sellers in the USA.



However, things are looking up for Amazon sellers.



A few years ago, some sellers were told to register and collect sales tax in every state. That isn’t really easy to do.



Over the last year, most of the important states (for e-commerce sales) have moved to the “Marketplace collection model” regarding sales tax law. This fundamental change in sales tax law means that they are making the marketplaces - including Amazon -  responsible for collecting sales tax.



Paul has said all along this is the requirement!



By October, just about “every state you care about” (see list later) will change their sales tax law to require Amazon to be the tax collector.

Why have so many lawyers or accountants been telling sellers to register for and collect sales tax?

Money! It’s lucrative - it makes more customers.



Even for a sales tax law expert and a lawyer who represents sellers, Paul could have jumped on the bandwagon, eg fighting back tax liability. But he felt it was wrong.



People Paul respects in the space have however NOT been telling sellers to register.

Paul’s background

He was a tax litigator for 15 years. In house counsel for Microsoft, Walmart, GE.



Fought most states except Hawaii!



Teaches a course in constitutional law in NY.



Used to be an Amazon seller and wife used to work for seller performance and have drinks with them.  So he understands Amazon sellers.

Why Paul co-created ecomattorneys.com

Most lawyers who deserve the respect of Amazon and e-commerce sellers are normally the ones who sellers couldn’t afford.



So Paul decided to make himself a lawyer for Amazon sellers. Tax is the main starting point, especially sales tax law.



He was partly motivated by bad information out there about tax and tax law, especially sales tax law. If you get on enough podcasts, you get credible even if you don’t have the CV/resume.



Look in Youtube for podcasts, Youtube - Paul has been pretty anti sellers registering for sales tax, even when states were offering back tax amnesty.

Isn’t it just the safest thing to comply with sales tax law?

The first issue is that it’s not affordable.



Paul works with companies that do $100 M off Amazon - even $10 M - they DO have to register.



But if you’re doing $2-4 M on Amazon, the hassle and time needed is a lot and probably just not affordable.

The hidden issue with sales tax: other tax liabilities

If you register with software companies - they are sales tax specialists; but there is more to it than sales tax.



There’s income tax, corporation tax etc.. So you can often put yourself in more danger based on the other taxes other than sales tax.



The law is - you’re not a retailer when you sell via Amazon!



If you’re doing things like Amazon does - Amazon is effectively acting as a retailer so it should legally be treated as one.



That’s what California law says. It’s not what the state of California does - and many of the states have been influenced by Amazon and pushed down this road. But that tide is now turning.

Moot Point

It’s also now a moot point.  Amazon is now to become a sales tax collector by end of year in the majority of important states.



The only major state (in terms of e-commerce revenue) that won’t do it this year is Florida - the Republicans thought it was a tax increase (it wasn’t, according to Paul,

Further episodes of Amazing FBA Amazon and ECommerce Podcast, for Amazon Private Label Sellers, Shopify, Magento or Woocommerce business owners, and other e-commerce sellers and digital entrepreneurs.

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