Amazon FBA2 min read
FBA inventory nexus: which states your stock creates nexus in
Your stock is in states you have never visited, placed there by a company that did not ask you. Whether that creates an obligation is genuinely contested — which means it is a decision you have to make rather than a fact you can look up.
Published
Send inventory to Amazon and it is distributed across fulfilment centres according to Amazon's logistics, not your intentions. You typically learn which states hold your units by pulling a report after the fact.
Physical presence in a state has long been the strongest basis for a tax obligation, and inventory is physical presence. So the question that follows is obvious and, unhelpfully, not fully settled.
What marketplace-facilitator law changed
Every state with a sales tax now requires marketplaces to collect and remit on the sales made through them. Amazon collects on your Amazon orders. That removed the large majority of the day-to-day burden and is why this topic is far less alarming than it was several years ago.
Where the exposure actually is
| Your setup | Exposure |
|---|---|
| FBA only, no other channel | Low. Amazon collects on everything. The open question is registration in inventory states, which is worth a position but rarely produces a large liability. |
| FBA plus your own store | This is where the money is. Your direct sales are not collected on by anyone, and inventory-created physical nexus can mean you owe from the first dollar rather than after a threshold. |
| FBA plus other marketplaces | Each marketplace collects on its own sales. Thresholds may still aggregate across channels in some states. |
Getting a position, state by state
- Pull the inventory placement report and list the states that have held your stock. This is the factual basis for everything else.
- Check each state's published position on inventory held by a marketplace on a seller's behalf. Some address it explicitly.
- Consider your other channels. A state where you have inventory and direct sales is a much higher priority than one where you have inventory and only Amazon orders.
- Register where you conclude you must, and do it before the liability compounds rather than after a notice arrives.
- Do not register in twenty-five states reflexively. Each registration creates an ongoing filing obligation — including zero returns — that continues until you formally close it.
Inventory placement options
Amazon offers programmes that affect how your inventory is distributed, and the fee structures change periodically. Concentrating inventory in fewer locations can narrow the question, though it usually costs more in placement fees and may affect delivery speed. That is a commercial trade-off with a compliance side effect, not a compliance strategy in itself.
The one thing worth doing regardless: keep the placement reports. Reconstructing where your inventory was three years ago is impossible without them, and that is exactly the period a state will ask about.
Know which states you are in
Founders 8 tracks the registrations and filings your business has picked up, so nothing accrues in a state you did not know you were in.
Build your workspaceThis is one section of the amazon fba structure guide, which covers the entity choice itself.
Founders 8 does not provide tax advice. Tax residency depends on facts and rules specific to each jurisdiction — review your position with a qualified adviser.