The Highlights
- Marketplace facilitator laws are in place to simplify compliance both for sellers and marketplaces themselves.
- A few states, like New Hampshire, Delaware, Oregon, and Montana, do not currently have marketplace facilitator laws.
- Sales tax thresholds for marketplace facilitators can vary from state to state.
- You may still need a sales tax permit if you also sell through your website or other marketplaces, depending on your state.
Marketplace facilitators like Amazon have completely changed the way ecommerce businesses sell and grow today. Despite the increasing reliance on Amazon in the US, many sellers still don’t quite understand the role of marketplace facilitator sales tax laws, and how they actually impact their everyday business.
What are the states with marketplace facilitator sales tax laws, and what should you look out for when selling on these marketplaces? Get the answers you need with this RJM Tax Exemption blog.
What’s The Point of Marketplace Facilitator Laws in Sales Tax, Anyway?
A marketplace facilitator is any entity that facilitates sales by working with third parties, allowing them to sell goods and services on its platform for a fee. The biggest names you might be familiar with are:
- Amazon
- Etsy
- eBay
- Walmart Marketplace
Why do marketplace facilitator laws exist? As usual, it all comes down to easier compliance. By requiring marketplace facilitators to collect and remit sales tax on behalf of the sellers, states can simplify sales tax collection. Instead of individually collecting sales tax from thousands of sellers in a state, they just need to work with the marketplace facilitators operating within.
Which States Have Marketplace Facilitator Laws in Sales Tax?
Nearly all of them! Currently, there are only four states in the US that don’t have marketplace facilitator laws due to them not having a state-wide sales tax. These states are:
- New Hampshire
- Delaware
- Oregon
- Montana
And yes, Alaska does have marketplace facilitator sales tax laws even without having a state-wide sales tax. This is because there are some local sales taxes that need to be accounted for. Despite the overwhelming majority of states passing marketplace facilitator legislation, sales tax thresholds can still vary a lot from state to state, along with differences in sales tax registration requirements, thousands of taxing jurisdictions, and more.
How Marketplace Facilitator Laws in Sales Tax Vary
Let’s take four states and examine how marketplace facilitator laws can vary from state to state.
| State | Sales Threshold for Marketplace Facilitators |
| California | >$500,000 in annual sales to California customers |
| Alaska | >$100,000 in retail sales or 200 retail transactions to Alaska customers Additional local sales taxes may apply based on jurisdiction. |
| Florida | >$100,000 in annual retail sales to Florida customers |
| Mississippi | >$250,000 in sales over a consecutive twelve-month period |
Naturally, these thresholds have been designed to be easily reachable by major marketplace facilitators like Amazon and Etsy.
Differences between Marketplace Facilitators
Marketplace facilitator laws on sales tax vary from place to place, but the policies adopted by each facilitator can also differ. As a seller, you should be aware not just of the states with marketplace facilitator sales tax laws, but also of the different policies adopted by each facilitator.
- Walmart must collect and remit sales tax as a marketplace facilitator to all states it’s registered in. Which are all states except NH, DE, OR, and MT. Just like Amazon and eBay. Their rules are all pretty much the same; they handle sales tax collection for all states, but may not handle some localities, etc.
- Amazon collects and remits sales tax on behalf of third-party sellers where the destination is a state with marketplace facilitator sales tax laws in place. However, Amazon is not responsible for collecting and remitting local sales tax in certain jurisdictions.
- eBay allows for slightly more seller input on its tax settings compared to Amazon, but is otherwise fairly similar in terms of other policies.
Compliance with Marketplace Facilitator Laws in Sales Tax
Yes, You Do Need to Keep Those Sales Tax Permits Current
If Amazon’s handling your sales tax obligations for you, then surely there’s no need to keep those permits current, right?
Not quite.
Economic nexuses can get really complicated once marketplaces like Amazon are involved, giving you the double-edged sword of national and global access. If a local jurisdiction where you have a nexus enforces its own sales tax regulations, you might be responsible for collecting and remitting sales tax in that locality yourself.
Selling on Other Platforms
You’ll need a sales tax permit if your business sells to customers directly on your website or even through other platforms if they aren’t covered by marketplace facilitator laws in sales tax. Note that if you do not have sales tax Nexus, you do not need a sales permit.
Many states also have ‘zero-return’ filing for businesses that only conduct business through marketplace facilitators, requiring them to file a simple annual return.
State-wise Requirements
Marketplace facilitator sales tax laws, based on the state, could require sellers to file an annual sales tax return even if the sales tax has been collected and remitted by the marketplace facilitator. As a seller, you’ll need to report the sales made in the state and those specifically made through the marketplace.
Easier Compliance Starts Here
Keeping track of states with marketplace facilitator sales tax laws and the multiple different reporting thresholds is no easy task if you’re an ecommerce business. Complying with marketplace facilitator laws in sales tax is easier when you’re working with an expert like RJM Tax Exemption.
Work with a tax expert who truly understands your business and puts you first with phenomenal customer service and a price match guarantee. Contact us today to get started.
Frequently Asked Questions
Do I need a sales tax permit if I’m selling on Amazon?
You might not require a permit based on the state you’re in, but it’s always a good idea to get one, especially if you’re also selling through your own website or if you have an economic nexus in other states.
Do marketplace facilitator laws in sales tax apply to all states?
No. While most states have passed marketplace facilitator sales tax laws, a few states, like Oregon, Delaware, New Hampshire, and Montana, do not have them.
How can I stay compliant if I sell across multiple marketplaces?
You should strongly consider working with a sales tax expert like RJM. Different marketplaces have varying policies for sales tax, and your reporting obligations might differ.
