What I wish I’d known before…
Hello! My name is Gail Grant Park, and my first book was published on Amazon in 2023. As an indie author, I didn’t have to worry about collecting sales tax whenever a book sold, Amazon collected it. Then I put my books on commission in local bookstores like Barnes and Noble and they, likewise, collected the sales tax and paid me cash for books sold through them. Then I signed up for book fairs and book signing gigs…That’s when it got tricky.
I didn’t know that I had to collect sales tax on the author copies I sold directly to the public. I didn’t know I needed to have a seller’s certificate to sell my author copies to the public. I live in Idaho, and tax laws vary from state to state, so it’s important that you research the law in the state you reside in. Here, once you’ve registered as a seller, Idaho requires a quarter sales tax return even if you’ve had zero sales that quarter. Failure to file a return can (will!) result in penalties and fines.
Once I learned I needed to pay sales tax on books I sold myself, (midway through 2024) I dutifully registered with the state tax commission, got my certificate and paid my back taxes on books I’d sold the previous year. That meant I’d “missed” two quarters of payments and was immediately fined $500 for each quarter filed late. When my sales had been less than $100 to begin with, that really stung. I paid the penalties, then about a month later I found a refund for both of the $500 penalties in my account. Seems I hadn’t made enough money in sales to actually warrant the fines. (Phew! So glad I didn’t sell more books…?)
One more thing. In the fine print (which I wasn’t able to find again to reference here) I learned that even if I gifted a book to someone — you know, as a giveaway prize for a drawing, or to a book reviewer, or to a family member for their birthday — I still needed to pay sales tax on that item. So, I buy an author copy from Amazon for $5.00 and pay sales tax on that purchase (plus shipping, as author copies aren’t eligible for Prime free shipping) then gift the book to my granddaughter for Christmas. I need to pay the State of Idaho 78 cents sales tax on the full list price ($12.99) of the book.
I suggest creating a spreadsheet or QuickBooks account to keep track of all this! And add the quarterly filing dates in your calendar. Or move to a state that doesn’t charge sales tax …
