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U.S. Tax for Cross-Border E-Commerce Sellers: The Marketplace Collecting Sales Tax Does Not Mean You Have No Obligations

Amazon collects the sales tax, the platform sends you a 1099-K, inventory sits in FBA warehouses — none of that changes three things: your U.S. entity must file income tax and Form 5472, you may have to register and file yourself in states where you hold inventory or sell through your own site, and your books must show real margins. We sort out all three for Chinese sellers in the U.S.

The short answer

A Chinese seller's three layers of U.S. obligations

Written and reviewed by Founder, B&G · Florida-Licensed CPA · IRS Enrolled Agent
Last reviewed: 2026-09-11

Layer one: entity income tax and information returns. Most sellers operate through a U.S. LLC or corporation. A single-member LLC wholly owned by a Chinese company or individual must file a pro forma Form 1120 with Form 5472 every year; a C corporation files Form 1120 plus 5472; a multi-member LLC files Form 1065 and withholds on foreign partners. Marketplace sales in the U.S. are generally U.S.-source income — "the company is in China and the money is in China" does not remove the filing.

Layer two: sales tax. Every state with a sales tax has a marketplace-facilitator law, so Amazon, Walmart, TikTok Shop and similar platforms collect and remit on marketplace orders. Sales through a Shopify or DTC site, B2B wholesale and offline channels remain your responsibility; FBA inventory in a state can create physical nexus, and DTC sales above a state's economic-nexus threshold (most commonly $100,000) require registration. Whether a marketplace-only seller must still register in an inventory state varies by state and has to be checked state by state.

Layer three: the books. Marketplace settlements arrive net — refunds, fees, advertising, storage and reimbursements all mixed together. Cross-border inventory must carry purchase price, duty (materially higher since the de minimis exemption ended in 2025), freight and storage into landed cost before gross margin means anything. Books that are not reconciled settlement by settlement can only be "estimated" at tax time, and a mismatch between the platform's 1099-K and your reported revenue is one of the most common reasons the IRS writes.

Typical situations

Sellers we work with

Amazon FBA sellers

Multiple stores and marketplaces, inventory across many states. Settlement reconciliation, FBA fee classification, inventory-state nexus and Form 5472.

Shopify / DTC brands

You collect the money, so you own the sales tax. Shopify Payments and Stripe/PayPal reconciliation, economic-nexus monitoring, state registrations and returns.

TikTok Shop and multi-platform sellers

TikTok Shop, Temu and Walmart in parallel. Each platform settles differently; you need one consistent rule set for revenue and fees.

U.S. sales companies of Chinese factories

The parent supplies, the U.S. company sells. Intercompany purchase pricing, inventory and landed cost, Form 5472 and transfer-pricing documentation.

B2B wholesale and distribution

Supplying U.S. retailers or distributors. Exemption-certificate management, nexus and income-tax apportionment, receivables management.

Sellers who already received an IRS or state letter

1099-K mismatches, state sales-tax inquiries, Form 5472 penalties. We analyze the impact first, then respond on your behalf until the matter is closed.

What we do

A bookkeeping and compliance system built for e-commerce

  • Marketplace settlement reconciliation: revenue, refunds, fees, advertising and storage from Amazon, Shopify, TikTok Shop and Stripe/PayPal booked by settlement period and matched to bank deposits — so the year agrees with the 1099-K.
  • Inventory and landed cost: purchase price, duty, inbound freight and storage capitalized into inventory and relieved to COGS on sale; period-end inventory tied to platform inventory reports.
  • Sales-tax nexus and filings: physical and economic nexus assessed state by state, registrations, tax setup on Shopify/DTC channels, recurring returns, exemption-certificate management; new platforms or states assessed before launch.
  • Entity income tax and Form 5472: federal and state returns for the LLC or C corporation, pro forma 1120 plus 5472, withholding on foreign partners; pricing support for intercompany purchases.
  • Payroll and contractors: payroll and W-2s for U.S. employees; W-9 collection and 1099-NEC for U.S. contractors and service providers.
  • Management reporting: gross-margin reports by store, platform and SKU, in Chinese and English, so the China team sees real profitability every month.
Outcome: Real gross margin by platform every month; sales tax registered where required and filed on time; annual income tax and Form 5472 filed on schedule with the 1099-K agreeing to reported revenue.
How it works

From platform data to compliant filings

01

Map

Entities and ownership, stores and platforms, inventory states, payment channels.

02

Assess

Nexus by state, historical filing gaps, differences between the books and 1099-Ks.

03

Build

E-commerce chart of accounts in QuickBooks, settlement reconciliation process, sales-tax registrations and tax setup.

04

Run

Book by settlement period, file on schedule, report margins monthly.

FAQ

Questions sellers ask most

Amazon already collects sales tax. Do I still need to register?
Marketplace orders are handled by Amazon, but whether you must still register in states where FBA inventory sits varies by state; sales through your own site, wholesale and other channels are always yours. We decide state by state — no missed registrations and no unnecessary zero returns.
I am a Chinese individual selling on Amazon through a U.S. LLC. Do I owe U.S. income tax?
A single-member LLC's income flows to you personally; whether it is taxed in the U.S. depends on whether it is effectively connected with a U.S. trade or business and on treaty terms. Regardless, the LLC must file a pro forma Form 1120 with Form 5472 every year or face a $25,000 penalty.
The 1099-K is much larger than my actual revenue. What now?
The 1099-K reports gross amounts before refunds and fees; you report net revenue. As long as the books reconcile the two and explain the difference, there is no issue — an unexplained gap is the issue. That is why we reconcile by settlement period.
How do we book duties now that de minimis ended in 2025?
Duty, brokerage and inbound freight are part of the cost of inventory: capitalized into landed cost and released to COGS as goods sell, not expensed when paid. This directly affects your gross margin and income tax.
I have FBA inventory in many states. Do I file income tax in each?
Inventory can create both sales-tax and income-tax nexus, and the P.L. 86-272 protection for sellers of tangible goods is narrowing in the e-commerce era. Registration obligations and apportionment have to be assessed state by state.
Can you access my Amazon account?
We work from Seller Central reports (settlement and inventory reports) and Shopify/Stripe exports, or through read-only user permissions — we never need your login credentials.

Talk to us on WeChat   Read next: What is sales tax nexus →

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