I’m an Author and Sell on Amazon: How Does Sales Tax Work?

by TaxJar May 16, 2016

We’ve had a few questions lately from Amazon FBA sellers who have written a book and want to sell it on Amazon. I totally get it! Writing a book is a great way to diversify your income.

But authors have also been, understandably, concerned that writing a book and selling it on Amazon may open them up to some new sales tax liability. I’m happy to say that we can put that fear to rest!

Selling on Amazon Author Central

When you write a book you can publish and begin selling it through Amazon Author Central. This is – you guessed it! – similar to Amazon Seller Central but for authors.

If you’re first publishing your book, you can use tools like CreateSpace to publish a physical book, Kindle Direct Publishing to publish a Kindle book, or ACX to publish an audiobook. You can also manage your Amazon Author page and add extras like an Author Bio, blog feed and event schedule to further promote your books. Here’s William Shakespeare’s!

Even authors who’ve had a book published by a publisher like Random House rather than publishing directly with Amazon, can still use Author Central to manage your profile.

Amazon Author Central is a great one-stop-shop for managing and promoting the book you wrote.

Sales Tax for Authors on Amazon

Probably the best thing about publishing your own book through Amazon Author Central is that you are not the seller of record. Why is this so great? Because it means you are not responsible for collecting the sales tax on the books you publish!

In this case, Amazon is the seller of record and will sell the book on your behalf. So when readers get the receipt from your book, they’ll see that they bought it from Amazon and not from you directly. If you are selling your book through Amazon, Amazon takes care of charging your customers sales tax and remitting sales tax to the state. So Amazon charges and collects sales tax in states where digital books are taxable. You don’t have to worry about collecting sales tax on the books you sell!

Now there’s one caveat: Any author can use Amazon Author Central to manage their author bio, etc. This is even if you have published your book yourself and have pallets of them sitting in a warehouse.  If you are selling copies of your book yourself or through a different marketplace, you may be liable for sales tax. A good rule of thumb is to remember that sales tax is always due if a transaction is taxable. Either Amazon (or a publisher, bookstore, etc. that you have a working relationship with) should collect tax from the customer, you should collect it from the customer, or the customer should pay use tax.

Reselling Books You Authored

This is where sales tax can get a little tricky. Let’s say you have a few physical copies of your best seller left over and you want to sell them online through Amazon FBA. In this case, they are considered inventory just like any other item you might sell on FBA. If Amazon ships them all to Kentucky, then that may create sales tax nexus in Kentucky for you. Again, the rule of thumb to remember is that if a product is taxable, sales tax is always due whenever the product is sold.

More Resources for Authors Selling on Amazon

Sales Tax 101 Guide – While this guide is aimed at online sellers, it helps all sellers learn about sales tax liability and the best way to manage it.

Do Trade Shows Create Sales Tax Nexus? – Let’s say you’re selling your own book and you spend the summer selling your book at festivals across 5 states. Some states consider making a single sale in the state to create sales tax nexus, while others do not. (Also, keep in mind that many festivals, book stores, etc. will have a bookseller on hand to sell your books for you. This generally includes collecting the sales tax. In that case, you would be off the hook for collecting sales tax!)

TaxJar’s list of vetted sales tax pros – Have you written a book and need sales tax help? Our vetted pros are a great place to find your accounting partner!

Ready to automate sales tax? To learn more about TaxJar and get started, visit TaxJar.com/how-it-works.

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