◆ Case · Cross-Border Tax
E-Commerce
$0 penalties · $31K recovered
A profitable Ontario consumer brand selling through its own website and Amazon US. Annual US revenue of approximately $680,000 spread across all 50 states. In business for four years, two of which had included US sales. No US tax adviser had ever been engaged.
The owner came in for a routine corporate tax review. When the question of US sales came up in the intake, the response was: "Yeah, we sell into the US but we're Canadian so we don't have obligations there." That assumption is incorrect — and had been incorrect since 2018.
We ran a state-by-state nexus analysis against two years of US sales data. The business had crossed the economic nexus threshold in four states: New York, California, Texas, and Florida. None of them had been registered, collected, or remitted.
Because the business sold through Amazon FBA, Amazon had been collecting sales tax on its behalf in states where Amazon had registered — but the collected amounts had been sitting in the Amazon account. The total amount held was approximately $31,000.
We initiated voluntary disclosure in all four states. Voluntary disclosure eliminates penalties and interest in most states when initiated before the state contacts you. The $31,000 held by Amazon was released to the correct state accounts.
$0 in penalties. All back obligations settled through the voluntary disclosure process. The business now has automated sales tax collection in place and a clear picture of where it has — and does not have — nexus obligations.
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