The Client
A US-based e-commerce seller using Amazon FBA and a Shopify storefront, generating approximately $4.5 million in annual revenue. The business sold health and wellness products shipped nationwide from Amazon's fulfillment network.
The Problem
The seller was collecting and remitting sales tax in only 4 states — their home state and three states they assumed had obligations. They had no idea that Amazon's fulfillment network was creating physical nexus in warehouses across the country, and that Wayfair-era economic nexus thresholds were being triggered in additional states.
Key insight: When Amazon stores your inventory in its fulfillment centers, you have physical nexus in every state where your products are warehoused — even if you never chose those locations. Combined with economic nexus thresholds (typically $100K in sales or 200 transactions), most FBA sellers owe sales tax in far more states than they realise.
What We Found
Wealthovation's team conducted a comprehensive nexus analysis across all 50 states:
| Category | States | Status |
|---|---|---|
| Collecting & remitting | 4 | Compliant |
| Physical nexus via FBA warehouses | 9 additional | Not registered |
| Economic nexus threshold exceeded | 4 additional | Not registered |
| Total states with obligation | 17 | 13 non-compliant |
Estimated total past-due sales tax liability across 13 non-compliant states: $140,000, covering periods of 12–36 months depending on the state.
What We Did
1. Full 50-state nexus analysis — mapped physical and economic nexus for every state using FBA warehouse data and sales reports
2. Voluntary Disclosure Agreements (VDAs) — filed VDAs in 11 of the 13 non-compliant states, negotiating limited lookback periods and waived penalties
3. Direct registration — registered in 2 states where VDAs weren't available or necessary
4. Back-tax calculation and payment — computed exact liability for each state's lookback period
5. Ongoing compliance setup — configured monthly filing and automated remittance for all 17 states
Result: VDA negotiations reduced total penalties by approximately 70%. The seller paid the actual tax owed plus minimal interest, avoiding what could have been a six-figure penalty assessment. All 17 states are now in full compliance with automated monthly filings.
Key Takeaway
If you sell through Amazon FBA, you almost certainly have sales tax obligations in states you don't know about. The longer you wait, the larger the exposure grows. A Voluntary Disclosure Agreement is the single most effective way to resolve past non-compliance — most states offer reduced penalties and limited lookback periods, but only if you come forward before they come to you.