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Industry tax guide

E-commerce and retail tax and accounting

Tax planning for sales in every state and inventory on every shelf.

E-commerce & Retail business environment

Online sellers and retailers move inventory through stores, warehouses and marketplaces, sell to customers in many states and refresh their stores and systems regularly.

The tax issues are where sales tax is owed, how inventory is valued, how store remodels are deducted, and how marketplace payouts reconcile with the forms platforms file.

Compared with a general business

What makes taxes different for e-commerce and retail

Sales tax in many states

Economic nexus can require collection in states where you have no physical presence.

Marketplace reporting

Platforms issue Form 1099-K on gross payments, which must be reconciled to net income.

Inventory accounting

Inventory method, shrinkage and returns affect taxable income every year.

Store remodel safe harbor

Retailers can deduct 75% of qualified remodel and refresh costs under Revenue Procedure 2015-56.

The rules in detail

Tax rules for e-commerce and retail

Economic nexus and marketplace sales

Since 2018 states can require sellers to collect sales tax based on sales into the state alone. Marketplaces collect for sales they facilitate, but your own website and wholesale sales may still create obligations.

Remodel-refresh safe harbor

Retailers and restaurants can use an IRS safe harbor, Revenue Procedure 2015-56, to deduct 75% of qualified store remodel and refresh costs right away and depreciate the remaining 25%.

Inventory methods for smaller sellers

Businesses under the gross receipts threshold can treat inventory as non-incidental materials and supplies or follow their books, and are exempt from the Section 263A capitalization rules.

Planning moves

Ways to save tax in e-commerce and retail

  1. Register only where you must

    A nexus study avoids collecting where you do not need to and exposure where you do.

  2. Use the remodel-refresh safe harbor

    Deduct 75% of qualified remodel costs right away.

  3. Choose the right inventory method

    Small sellers can follow their books or treat inventory as supplies.

  4. Deduct store build-outs

    Qualified improvement property with 100% bonus depreciation.

  5. Reconcile 1099-K to avoid overpaying

    Refunds, fees and shipping are removed from reported income.

  6. Hold inventory in the right entity

    Entity structure can reduce state taxes for multi-channel sellers.

Working with OICPA

How we help

Service

Plan store remodels

The safe harbor and repair rules applied before the remodel is booked.

Business Tax Advisory
Service

Books reconciled to every channel

Marketplace payouts, fees, refunds and 1099-K amounts reconciled monthly.

Outsourced Accounting

Bookkeeping and reporting

The accounting behind the tax work

Selling product, online, in a storefront, or both, means the tax picture lives inside inventory and sales tax exposure, not just the P&L. We build the inventory discipline and nexus visibility that keep margin reporting and filing obligations accurate as channels and states multiply.

Inventory accounting drift

Cost of goods sold is only as accurate as the inventory method behind it. Sellers who estimate at year-end instead of reconciling counts regularly are reporting a margin that doesn't match reality, and a tax return built on it.

Multi-state economic nexus

Since Wayfair, revenue alone can create a sales tax registration obligation in a state a business has never set foot in. Growth across channels and states outpaces most sellers' awareness of where they've crossed a threshold.

Platform and payout reconciliation

Marketplace fees, ad spend, and payouts arrive through multiple platforms that each report differently, or not at all. Books that don't reconcile every platform against actual bank deposits are guessing at true revenue.

What you can expect

  • Inventory and COGS reconciliation tied to actual counts, not year-end estimates
  • State-by-state nexus and registration status report
  • Monthly platform reconciliation package across every sales channel in use

Frequently asked questions

If Amazon collects sales tax, am I done?

Not necessarily. Marketplaces collect on sales they facilitate, but sales through your own site, wholesale channels or other platforms may still require registration and filing.

Can we deduct a store remodel in one year?

Under the remodel-refresh safe harbor, 75% of qualified costs can be deducted right away. The rest is depreciated, often quickly if it is qualified improvement property.

Why doesn't my 1099-K match my income?

It reports gross payments before refunds, fees and shipping. We reconcile it to your books and report the net correctly.

Related articles

References

  1. Revenue Procedure 2015-56: remodel-refresh safe harbor for retailers and restaurants (PDF)Internal Revenue Service
  2. Streamlined Sales and Use Tax AgreementStreamlined Sales Tax Governing Board
  3. Understanding your Form 1099-KInternal Revenue Service
  4. 26 U.S. Code § 471: General rule for inventoriesLegal Information Institute, Cornell Law School

Rules reflect federal tax law as of November 2026.