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The California Franchise Tax Board Contacts Amazon FBA Sellers Requesting Income Tax Filings

October 30, 2020

The California Franchise Tax Board (FTB) is sending notices to many Amazon FBA (Fulfillment by Amazon) sellers, demanding that the sellers file franchise tax returns with the state. The letters state that, according to records, these sellers are suspected of having franchise tax obligations with the state but did not file 2018 returns. Business Entity Questionnaires are included with some of the letters, allowing sellers to provide information to dispute the franchise tax obligations.

The California FTB most likely obtained information from the California Department of Tax and Fee Administration (CDTFA), identifying remote sellers with inventory stored in California Amazon warehouses during 2017.

California taxes are complicated depending on the type of entity choice including LLC taxes, LLC fees, S-corporation income tax and non-resident tax withholding considerations. Sellers receiving one of these notices can reach out to Cherry Bekaert’s State and Local Tax Team for help addressing the notices and resolving sales or franchise tax compliance issues. Contact us at etax@cbh.com.