Import Integrity and Fraud Prevention Act

Overview

Foreign-based sellers on Amazon: Bringing in tax revenue, protecting U.S. businesses and providing national security

The problem (in one minute)

• China-based sellers now make up 50%+ of top Amazon.com sellers and Walmart.com had 30% of foreign sellers of 200,000, a structural shift that tilts the marketplace away from U.S. businesses. There are 1.1 million sellers on Amazon, over ½ of them are foreign based sellers. The number of foreign based sellers have doubled since 2020. Marketplace Pulse+2Marketplace Pulse+2

• New tariffs made this problem much worse:  Chinese importers report a lower commercial value on their invoices compared to American importers. As a result, Chinese importers are paying much lower import taxes resulting in a price advantage for them versus U.S. importers

• No patent protection against Foreign Importers: Current law does not allow US companies to sue or take action against Chinese importers for violating patent violations.

• Platform structure enables tax arbitrage: Amazon requires sellers—not Amazon—to be the Importer of Record (IOR) for inventory entering the U.S., and foreign entities commonly file W-8BEN-E to avoid U.S. withholding—leaving little corporate, payroll, or local tax footprint here. Amazon Seller Central+1

Why this is a national-security and economic issue

• Business erosion: U.S. brands that import, hire locally, and pay taxes face persistent price undercutting by offshore sellers with lower compliance costs.

• Strategic dependence: Growing reliance on non-resident sellers for everyday goods weakens domestic resiliency and the U.S. business network.

What’s happening inside the rules

• IOR (Importer of Record) gap: Amazon will not act as IOR; many foreign sellers ship direct to FBA, with no U.S. auditability for customs valuation or product liability. Amazon Seller Central

• W-8BEN-E allows foreign entities document status for no U.S. withholding; absent a U.S. entity, much activity remains outside core U.S. corporate/state/local tax systems. IRS

The solution Congress can advance

1. Require a U.S. entity for the Importer of Record (or a designated U.S. responsible party) for sellers shipping goods into U.S. marketplaces—auditable, with U.S. EIN and U.S. bank.

2. Close the W-8BEN-E loophole for marketplace commerce:

   • 1099/withholding alignment for non-compliant payouts until a U.S. entity is established.

3. Customs & safety enforcement upgrades:

   • Tie marketplace disbursements to valid IOR numbers and verified customs value declarations.  This allows each importer to be audited and held accountable for taxes and product liability. 

Fiscal impact (conservative)

• Independent modeling indicates at least $20 billion/year in new federal revenue if foreign Amazon sellers are taxed like U.S. entities (corporate/dividend layers and payroll from at least one U.S. employee per entity), without counting potential tariff and valuation uplifts.

• Side benefits: restored local/state tax bases (corporate, payroll, franchise), better product-safety compliance, and a fairer competitive field for U.S. small and medium sized businesses. 

What we’re asking from your office

• Sponsor or support legislation that:

  • (A) Requires a U.S. entity as IOR (or designated U.S. agent) for all marketplace sellers, and

  • (B) Conditions marketplace payouts on verified EIN/IOR and tax reporting, effectively closing the W-8BEN-E workaround.

• Direct CBP/IRS/FTC coordination to align INFORM identity checks with IOR/EIN verification and customs valuation data sharing. Federal Trade Commission

Bottom line: This is a national-security, additional tax revenue, and U.S. based business competitiveness issue. A narrow, targeted fix—U.S. IOR + EIN for all sellers and closing the W-8BEN-E gap—can restore fairness and raise ≈ $20 billion annually for the federal government while strengthening U.S. economic resilience.

Selected references: Marketplace seller composition; CBP e-commerce/de minimis risk; Amazon IOR policy; FTC’s INFORM Act overview. Federal Trade Commission+7Marketplace Pulse+7Marketplace Pulse+7

Law already drafted:  See ROS25191_2.5 Sponsored by Senator Cassidy, need more support to push this through.

Proposed Law Draft

Proposed Tax Revenue Model

W-8BEN-E

Contact Information

John Stagge

Email: jstagge@scooch.com

Phone: +1 (317) 502-6615

LinkedIn: John Stagge