Amazon sellers, particularly those operating internationally, are seeing new tax prompts appearing in their Seller Central accounts, requiring them to update or resubmit W-8 series forms. While this might initially seem connected to the recent announcement about Amazon reporting seller data to Chinese tax authorities, this is a separate and distinct requirement focused on verifying tax identity for the U.S. Internal Revenue Service (IRS).
This update centers on verifying the seller entity's identity and beneficiary status. It affects all accounts interacting with the U.S. system, potentially including sellers not actively selling on Amazon.com. If your account has U.S.-related payment or transaction information, you might receive this W-8 update notification.
W-8 vs. China Tax Reporting
Confusion has arisen, with sellers asking if this W-8 update means additional taxes will be withheld. It's crucial to understand these are two different processes:
- China Tax Reporting (CRS): This involves Amazon reporting seller transaction data (like revenue) to Chinese tax authorities under cross-border tax information exchange mechanisms.
- W-8 Forms (IRS): This relates to U.S. tax law. The forms certify a seller's non-U.S. tax status, allowing them potentially to claim benefits under tax treaties (like reduced withholding tax rates) and avoid being treated as a U.S. taxpayer by default.
In simple terms: one reports transaction data to China; the other reports identity information to the U.S. The W-8 prompt itself doesn't mean you'll pay more tax. However, ignoring the request or filling the form incorrectly can have serious consequences. If the IRS cannot verify your non-U.S. status, Amazon may be required by law to withhold 30% of your U.S.-sourced income by default, assuming you are a U.S. tax resident.
Lowered Reporting Threshold Impacts More Sellers
A significant driver behind this wave of notifications is a new IRS regulation lowering the W-8 reporting threshold. Previously, sellers might have been exempt if their annual sales were below $5,000. That threshold has now been reduced to $2,500.
This change means many small-to-medium-sized sellers, who previously believed they didn't need to file due to lower sales volumes, will now fall under the IRS's scope for W-8 validation. Industry observers note this signals an end to the era where small amounts might go unchecked, shifting tax information verification from spot checks towards comprehensive validation, giving platforms and tax authorities a clearer view of cross-border fund flows.
Consequences for Non-Compliance
Amazon has added reminders within the "Regulatory Compliance" module in Seller Central. While exact timing may vary, some seller accounts indicate a deadline before the end of the year (likely December 31, 2025) to complete the update.
Once submitted, the system verifies the information against IRS rules. Failure to submit a valid W-8 form, missing the deadline, or providing incomplete information can lead to significant account restrictions, including:
- Suspension of account withdrawal functions.
- Restrictions on listing new products and running advertising campaigns.
- Inability to generate annual income reports (like Form 1099-K, if applicable).
Critically, accounts without updated, valid tax information risk having their funds frozen during the crucial end-of-year settlement period. Amazon is moving from passively collecting information to actively auditing compliance, ensuring every seller's tax identity is verified.
Completing the W-8BEN-E Form
For most non-U.S. business entities (like companies registered in China), the relevant form is the W-8BEN-E. When filling this out, pay close attention to:
- Legal Name: Ensure the company name exactly matches your business registration documents.
- Taxpayer Identification Number (TIN/EIN): Use the appropriate tax ID number issued by your country of registration.
- Entity Type & Chapter 3/4 Status: Correctly identify your business structure and FATCA status (most sellers will select an Active Non-Financial Foreign Entity status, but consult a tax advisor if unsure).
- Claim of Treaty Benefits (if applicable): Correctly cite the relevant tax treaty article if claiming reduced withholding rates.
- Hong Kong / U.S. Entities: If using a Hong Kong or U.S.-registered company, ensure the provided tax identification numbers are valid and active.
After submission, Amazon's system typically reviews the form within 1-2 business days.
Additionally, some sellers might see a notice that their "Tax information is expiring soon." W-8 forms generally have a validity period of three years, requiring periodic re-validation.
Crucially, Amazon requires all accounts to maintain valid tax information. Failure to do so will result in suspended fund disbursements until the required documentation is provided and verified. Sellers are strongly advised to check their Account Information section and complete any required tax updates promptly.
23 Oct, 2025
