Amazon’s New Deferred Transactions Policy: What Sellers Need to Know
Important information about Amazon's new policy that impacts your Amazon sales, reports, and taxes.
In October 2024, Amazon changed how they display and report deferred transactions in Seller Central, impacting the timing in which Amazon reports sales and fees under Payments Repository reports in Seller Central. The recent change creates discrepancies with their previous reporting method and with other internal reports in Seller Central.
If you sell on Amazon, this update could affect how your books look at year end. This guide breaks down the changes and what they mean for your ecommerce accounting.
What are deferred transactions?
Deferred transactions occur when Amazon temporarily holds funds before releasing them to sellers. This happens in two cases:
- Delivery Date Reserve (DDR) Transactions - Under Amazon's Delivery date reserve policy, funds are reserved for a set period after the shipment is delivered. Typically, this reserve period is 7 days after delivery (DD+7) (e.g., payment for an order delivered on January 6 will become available for payout on January 14).
- Invoiced orders - those are transactions that are awaiting payment by the buyer. Amazon waits for the customer to pay their invoice before releasing the funds.
Each transaction falls into one of two statuses:
- Deferred - when funds are still held (reserved) by Amazon.
- Released - when funds become available for payout.
What changed in Amazon’s policy?
In late October 2024, Amazon updated how they report DDR transactions (but NOT invoiced orders). Here’s the difference:
Where do these changes show up?
You’ll notice this change in the Summary and Transaction Reports in Amazon Seller Central:
- Go to Payments → Reports Repository
- Under Report Type, select Summary or Transaction reports.
In addition, Amazon introduced a new "Deferred Transaction" report under the Reports Repository which shows held transactions. Once a transaction is released, it moves from the "Deferred Transaction" report to the "Summary" and "Transaction" reports. Note that this report is available on-demand, and cannot be generated for historical transactions.
Important note about Amazon reporting
Amazon did not adjust past reports. Transactions before October 2024 still follow the old method – recorded on their delivery date – while transactions from November 2024 onward follow the new method – recorded only on the release date. This creates a timing inconsistency between how sales and transaction fees were reported before and after November 2024 in Amazon.
As a result, sales and transaction fees starting in late October 2024 are reported about one week later than they were under the old policy.
How does this change affect other Amazon reports?
While the primary impact is on the Summary and Transaction reports in the Payments section, other reports remain unchanged – specifically, Amazon’s 1099-K report still follows the old method (recording sales when deferred), while the Summary & Transaction reports now only recognize sales when released. This is an internal inconsistency within Amazon.
This inconsistency creates internal contradictions between Amazon’s different reports, making it more challenging for sellers and their accountants to reconcile their financial data accurately. Especially, since Amazon’s own reconciliation instructions in the 1099-K form direct sellers to the Summary & Transaction reports (see below), even though the 1099-K report issued by Amazon is not reconciled with their Summary & Transaction reports.
This also creates a mismatch between the numbers in your "Summary" and "Transactions" report and your Amazon Sales Dashboard. These mismatches in Amazon’s reporting is problematic and we hope Amazon will address it soon.
What does this mean for your 2024 books?
Typically, most ecommerce bookkeeping services and ecommerce accounting software use the Summary and Transactions reports to report your Amazon sales and fees in your books for tax purposes.
How Finaloop handles these changes
As an ecommerce bookkeeping service and Amazon accounting software, Finaloop automatically syncs and reconciles your Amazon transactions in real-time. Since our native integration with Amazon relies on Amazon’s Finances API, our reports align with the updated Summary & Transaction reports. That means, starting November 2024, transactions are recorded in Finaloop's P&L on the release date (and may be different than what you see in your Amazon Sales Dashboard).
There are two main reasons we follow this method:
- To stay reconciled with Amazon’s Summary & Transaction reports.
- Amazon’s API does not provide deferred transaction data, only release dates. We’re in contact with Amazon’s development team, who confirmed they’re working on API updates for deferred transactions, but there’s no timeline yet.
Since Amazon is delaying the recognition of sales by about one week, sales proceeds that were received and held by Amazon during the last week of 2024, and were released in January 2025, will appear only in Amazon's January 2025 reports. As a result, these sales proceeds will now be reflected in the January 2025 P&L report, and not December 2024.
Important note: This affects how 2024 year-end financials look, but no income or expenses are lost—just shifted between years.
How does this affect my tax return?
You have two options for handling your 2024 tax return.
Tip: We recommend consulting with your CPA to determine the most appropriate approach, taking into account the potential impact on your business and tax reporting, and how material this impact is from a cash tax perspective.
If you decide to move forward with option #2 and make adjustments for the deferred transactions, here are important points to know:
How to Estimate the Adjustment for Taxes
Since Amazon does not provide historical deferred transaction data, either through the API or via Seller Central, there is no straightforward way to identify transactions that were deferred in December and released in January.
But, here are three ways to estimate the amount:
1. Estimate based on the January 2025 Transaction Report
- Pull a Transaction Report for Jan 1-8, 2025 from Amazon Seller Central under Payments -> Reports Repository.
- Download the report and filter by "Type" to include only "Order" transactions and take the relevant sales, shipping credits, gift warp credits, promotional rebates, and fee data.
- Note: This approach is relevant only for Amazon sellers who are subject to the DDR policy of DD+7 days for all of their standard orders.
2. Take your 2024 P&L numbers and add ~2.19% (8/365) to the following sections:
- Sales - Amazon
- Shipping income - Amazon
- Discounts & promotions - Amazon
- Selling fees - Amazon
- Fulfillment services fees - Amazon
3. Estimate based on the 1099-K Report
- Under this approach, sellers can take the total sales amount for 2024 from the 1099 report.
- The challenge with this method is that the 1099-K does not include selling fees and fulfillment fees, so those amounts must be estimated.
Each method comes with trade-offs, so it's important to select the approach that best suits your reporting needs.
Important notes to the adjustment - Instructions to CPAs
If you and your CPA decide to make this one-time adjustment to the tax return, please note the following:
- Adjustment Account - The adjustment should be against a hold account (or an equivalent restricted cash account).
- Impact Across Marketplaces - The adjustment is needed in all marketplaces that are subject to the new DDR policy.
- Reversal in 2025 - The adjustment should be reversed in 2025 because these numbers are already included in the P&L for that year. If not reversed, there will be a risk of double-counting.
- Inventory and COGS Adjustments - If you've already reconciled your inventory balance to the end of 2024, no further adjustment is needed with respect to Cost of Goods Sold (COGS).
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