Taxes are a necessary part of every sales transaction, whether you run a physical business or an online one. The more items you sell, the more tax you pay. But fortunately for Amazon FBA sellers, there is a program that helps you lessen taxes through exemptions.
Learn more about the Amazon Tax Exemption Program (ATEP), so you can start setting it up for your Amazon business.
What Is the Amazon Tax Exemption Program (ATEP)?
Certain individuals and organizations are eligible for the Amazon Tax Exemption Program. This program supports tax-exempt sales for Amazon sellers, affiliates, and participating independent third-party sellers.
However, not every Amazon seller is eligible for the ATEP. Since Amazon is a larger marketplace, you must be qualified to enjoy the program. Here are organizations or individuals who can try for the exemption program.
- Charitable organizations
- US government organizations
- State and local organizations
- Resellers
- Direct payment holders
- Educational institutions
If your business is approved for tax exemptions, Amazon will handle it for you. Every time a buyer completes their purchase through your Amazon store, the system will automatically forgo the sales tax, so you don't have to present your tax exemption certificate manually.
How To Get Tax Exempt on Amazon Businesses?
If you have a small business, you will probably fall under the reseller category for the tax exemption program. Once you apply to be an Amazon FBA seller, the system will likely ask you to continue to sign up for ATEP. Amazon has an entire section of FAQs and guides for their tax exemption program so that you can check it out.
Here are the steps you should follow:
- Go to your Amazon seller account and look for ATEP registration.
- Provide the email address you used for your Amazon account.
- Provide business entity details such as a phone number and a business address.
- Provide information on the state where you are enrolling.
After giving the necessary information, it will take Amazon less than half an hour to process your registration. If it takes longer, Amazon is most likely waiting for your local tax authority to approve your request, which will take no longer than 24 hours.
FAQs on Amazon’s Tax Exempt Program
Now that you are well aware of the ATEP and how to register for it, you probably still have questions. The most frequent queries about Amazon's tax exemption program are listed below.
Can buyers register too?
Besides tax exemption for sellers, buyers can also participate in the exemption program. With ATEP, the system automatically handles tax exemptions. The system deducts the sales tax for every exempted buyer that purchases from your business and collects their tax exemption certificate for you.
These certificates are stored in the tax document library, and you can pull them out whenever you need them. Furthermore, an eligible buyer can filter results for tax exempted items to make their purchase more convenient.
Are all resellers required to apply for an Amazon tax-exempt business account?
The ATEP is not a mandatory program. You don’t have to participate in the service. However, the service helps reduce the number of customer inquiries about tax-related settings and prevents issues like tax refunds from customers.
What are the responsibilities of sellers enrolled in the ATEP?
Before you sign up for the tax exemption program, you should be fully aware of what happens to your tax calculations. Here are some of your obligations as an ATEP participant.
- Know your duties to determine tax exempt transactions.
- Direct buyers to Amazon customer service when they request a refund from an order fulfilled by Amazon.
- Answer all possible questions that customers may have on tax calculation and regulations.
- Gather necessary documents and validate them to support tax refund requests from customers.
What are tax exemption certificates?
When you enroll in ATEP, the platform generates a tax exemption certificate. This contains all information on the business that validates a business’s tax exempt sales. Similarly, buyers with tax exemptions also have certificates. These certificates need to be presented to waive the sales tax for the items they buy.
But if they are buying from Amazon sellers in the program, the system automatically collects the certificate, stores it in the tax document library, and applies the exemption to their purchases.
What should I do when I can't access the tax exemption certificates?
Remember, without the certificate as proof, your sales are not exempt from sales tax. In some situations, sellers cannot access their certificates even after finishing the registration process. To help you, here is a complete checklist to ensure you get your certificate.
- You should be an Amazon FBA seller.
- Make sure your registration in the Amazon account tax exempt program is complete and approved.
- The information you provided on the application form should be valid.
- An order from a customer has been confirmed for at least 48 hours.
Get Help With Sales Tax at Unloop
Now that you have a good idea about the Amazon Tax Exemption Program, you can give it a go and see if your business is eligible for exemptions. Additionally, if you need help with handling your taxes, Unloop offers professional services for small businesses like yours.
We offer services like bookkeeping, forecasting, accounting, payroll, and taxes. Book a call with our experts and work with us today!