How do I reconcile Amazon 1099-K data with my state sales tax filings?

The 1099-K total and your state sales tax filing totals will never match, and they shouldn’t. The key is having a documented reconciliation that explains every difference.

Why the numbers differ

Amazon’s 1099-K reports total gross payment volume. Your state sales tax returns should include only the sales where you collected and remitted tax directly. The gaps:

Amazon-collected sales tax: Amazon collects and remits state sales tax on marketplace-facilitated sales. That tax is included in the 1099-K gross but is not your tax liability — Amazon already paid it to the states. It should not appear on your state return as tax you collected.

Sales to no-tax states: Shipments to MT, OR, NH, DE, AK (no state tax) aren’t on any state return, but they’re on the 1099-K.

Exempt sales: Sales to exempt customers (resale, nonprofits) are on the 1099-K but are deducted on state returns as exempt sales.

Refunds and returns: 1099-K reports gross; your state return offsets refunds.

FBA fees offset from payouts: The 1099-K may reflect net payouts after Amazon fees in some periods, further complicating reconciliation.

Building the reconciliation

A clean reconciliation document starts with the 1099-K total and works down to what’s reported on state returns:

Amazon 1099-K Gross Proceeds:           $XXX,XXX
Less: Sales tax collected by Amazon:    ($XX,XXX)
Less: Sales to no-tax states:           ($XX,XXX)
Less: Exempt sales (resale, etc.):      ($XX,XXX)
Less: Refunds processed:                ($XX,XXX)
= Gross taxable sales on state returns: $XXX,XXX

This reconciliation should be prepared annually (when the 1099-K arrives) and kept in your records, it’s the first thing an auditor will ask for if a discrepancy is flagged.

Getting the data from Amazon

Amazon Seller Central provides detailed transaction-level reports:

• Sales Tax Report: shows tax collected by Amazon by state; this is what Amazon remitted on your behalf
• Payments Report / Settlement Report: shows gross sales, refunds, fees, and net payouts
• By-state sales reports: available in Seller Central under Reports > Tax Document Library

Export these for the relevant year before attempting the reconciliation: the 1099-K alone doesn’t have enough detail.

What to watch for

If your 1099-K gross significantly exceeds your aggregate state return totals without a clear explanation, that’s the discrepancy a state auditor would flag. Prepare the reconciliation before receiving a notice, not in response to one.