3 Takeaways From Pa.'s Amazon Inventory Tax Nexus Ruling

Richard Jones was quoted in the article, "3 Takeaways From Pa.'s Amazon Inventory Tax Nexus Ruling," which was published by Law360 [sub. req.] on September 16, 2022.

The article discusses key takeaways from a recent decision by the Pennsylvania Commonwealth Court on the issue of whether inventory held but not controlled by out-of-state, third-party retailers constitutes sufficient physical presence to establish income tax nexus. The retailers were participants in Amazon's Fulfillment by Amazon (FBA) program.

"We tend to think of inventory in the state as per se nexus," Rich says. "But there is this question that really gets addressed directly here: whether there's a potential due process override because you're not in control of the fact that you may have inventory in the state."

Regarding language in the Court's finding that limits the Pennsylvania Department of Revenue's investigative powers with such third-party vendors, Rich comments: "It's kind of a chicken or the egg scenario. I would think that if there is reason to think someone outside the state may have an obligation because they may have nexus, the threshold for making that inquiry might be a little different than the threshold for imposing a tax."