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Do Marketplace Facilitator Sales Need to be Reported on Sales Tax Returns?

In the heavyweight ring of ecommerce, savvy entrepreneurs recognize the potential and power of utilizing established online marketplaces such as Amazon, eBay, and Walmart, to gain an edge over their competition. Opting to sell through these venues can elevate the visibility of their products to millions of potential customers, while also streamlining the selling process, (albeit for a modest percentage of each sale).

However, this convenience does carry an added layer of complexity when it comes to tackling tax affairs. Operating across many platforms – from running your exclusive website to leveraging bigger marketplaces – raises several questions surrounding the collection and reporting of sales tax.

Are businesses mandated to report sales made through marketplace facilitators on their sales tax returns? Is there an obligation for businesses to collect sales tax on transactions made via these marketplaces? Navigating these questions is crucial for entrepreneurs aiming to operate in the digital landscape while avoiding the bad side of tax jurisdictions. But to address any of these queries, we first need to understand what a marketplace facilitator is.

What is a Marketplace Facilitator?

To fully make sense of what a marketplace facilitator is, it’s useful to examine the individual components of the term.

The Indiana Department of Revenue defines a “marketplace” as a platforms or a business that does one or all of the following activities:

  • Listing, promoting, or advertising products.
  • Transmitting or mediating an offer or acceptance of a retail transaction involving products between a seller and a purchaser.
  • Providing or offering fulfillment or storage services to a seller.
  • Setting prices for a seller’s products.
  • Offering customer support to a seller or their customers, managing order placement, returns, or exchanges of products sold.
  • Branding sales as those of the marketplace facilitator.

The term ‘facilitator’ stems from the verb ‘facilitate’, which means to make easier or to help bring about an outcome. Thus, a Marketplace Facilitator works in tandem with sellers to streamline transactions and bolster their customer base.

Examples of Marketplace Facilitators

Various online marketplaces exemplify the concept of Marketplace Facilitators. Some examples are:

  • Amazon
  • eBay
  • Etsy
  • Walmart
  • Auctions
  • Food Delivery Services (such as Uber Eats)
  • Tradeshows and Conventions

Distinguishing Between Marketplace Facilitators and Other Platforms

Understanding why certain platforms, like Shopify and BigCommerce, are not considered Marketplace Facilitators can appear challenging. The key is to recognize the role they play in collecting customer payments.

Marketplace facilitators collect payments directly from customers before transferring the proceeds to sellers, effectively becoming the ‘final retailer’ in these transactions. On the other hand, platforms such as Shopify and BigCommerce provide sellers with a sales space but do not collect customer payments. As a result, they are not classed as marketplace facilitators since the original seller remains the final retail point.

Do Marketplace Facilitators Need To Collect Sales Tax?

As with most answers in the sales tax sphere: it depends. Ever since the Supreme Court’s Wayfair decision in 2019, states have been enacting their unique versions of marketplace facilitator laws, some of which may bear resemblances, but none of which perfectly mirrors another.

While the specifics vary, there’s a common thread among most states – if a marketplace facilitator meets the nexus thresholds defined by a particular state, they are usually required to collect and remit sales tax on behalf of their sellers.

The rationale behind this is linked to the role of marketplace facilitators in the transaction process. As we discussed previously, facilitators who collect payments from the customer are considered the final retailer, and are therefore responsible for sales tax collection and remittance.

Marketplace Facilitator Laws By State

Every state levying sales tax has its own set of marketplace facilitator laws. These laws can range significantly concerning the reponsibilities and thresholds for marketplace facilitators and sellers. Here is a detailed breakdown of the state marketplace facilitator laws.

Note: Unless otherwise specified, all nexus thresholds apply to the current or previous calendar year.

StateDo Marketplace Facilitators Collect and Remit Sales Tax?Marketplace Facilitator Nexus ThresholdAre Sellers required to Report Marketplace Facilitator Sales on Their Sales Tax Returns?How To Report Marketplace Facilitator Sales on Your Sales Tax Return
AlabamaYes$250,000 or more in retail salesNoN/A
AlaskaYes$100,000 or 200 separate transactionsNoN/A
ArizonaYesMore than $100,000 in salesYesInclude gross amount (including facilitator sales) for each city/county line. Deduct facilitator sales uner code 804.
ArkansasYesOver $100,000 or 200 separate transactionsNoN/A
CaliforniaYesMore than $500,000 salesYesIncluded facilitator sales in Gross Sales and then deduct them under “Other Nontaxable Sales – Marketplace Facilitator Sales.”
ColoradoYesSales exceeding $100,000NoN/A
ConnecticutYes$250,000 or more retail salesYesReport gross sales including facilitator sales (Line 1). Deduct facilitator sales (Line 15 – Sales for Resale or Through a Registered Marketplace Facilitator).
FloridaYesOver $100,000 in taxable salesNoN/A
GeorgiaYesAt least $100,000 in taxable retail salesNoN/A
HawaiiYes$100,000 in gross income or 200 transactionsNoN/A
IdahoYesOver $100,000 in salesNoN/A
IllinoisYesOver $100,000 or 200 transactionsNoN/A
IndianaYesOver $100,000 in sales or 200 or more transactionsYesReport gross sales including facilitator sales on Line 1, deduct facilitator saels on Line 2.
IowaYesTaxable sales exceeding $100,000YesReport gross sales including facilitator sales under Sales Information – Gross Sales.
Report marketplace sales under Exemptions – Other (including Government).
KansasYesGross receipts exceeding $100,000NoN/A
KentuckyYes$100,000 or 200 or more transactionsYesReport gross sales and marketplace facilitator sales under Total Receipts – click on Deductions worksheet – write Marketplace Facilitator on a blank line – report the amount next to it.
LouisianaYesSales or transactions that exceed $100,000 or 200NoN/A
MaineYesOver $100,000 in gross sales or 200 or more transactionsYesReport marketplace facilitator sales in Gross Sales on line 1 – put facilitator sales under Deductions: exempt sales on line 2.
MarylandYesOver $100,00 in sales or 200 transactionsNoN/A
MassachusettsYesSales exceeding $100,000NoN/A
MichiganYesSales or transactions that exceed $100,000 or 200NoN/A
MinnesotaYes200 or more transactions or over $100,000 in retail salesYesReport marketplace facilitator sales and gross sales under Gross Receipts at the top – only report taxable sales in Minnesota locations, not including facilitator sales.
MississippiYesSales exceeding $250,000NoN/A
MissouriYesSales exceeding $100,000NoN/A
NebraskaYesOver $100,000 in sales or 200 transactionsYesInclude marketplace facilitator sales on Gross Sales and Services in Nebraska – omit marketplace sales on Net Nebraska Taxable Sales.
NevadaYesOver $100,000 in sales or 200 transactionsNoN/A
New JerseyYesMarketplace facilitators are required to collect and remit sales tax regardless of sales or transaction volumeYesInclude marketplace facilitator sales in gross sales. Deduct marketplace facilitator sales under deductions.
New MexicoYesOver $100,000 in taxable salesYesSelect Yes for gross sales and Yes for deductions. Report gross receipts including marketplace sales in each applicable jurisdiction. Enter marketplace sales by Deductions to omit them from taxable sales.
New YorkYesGross receipts exceeding $500,000 and more than 100 transactions in the previous four sales tax quarters.YesInclude marketplace facilitator sales in Gross sales – deduct marketplace sales in Total non-taxable sales.
North CarolinaYesExceeding $100,000 in sales or 200 or more transactionsYesReport marketplace sales in total sales on the first line – deduct them from taxable sales under Exemptions on the second line.
North DakotaYesTaxable sales exceeding $100,000NoN/A
OhioYesExceeding $100,000 in sales or 200 transactionsYesInclude marketplace sales in Gross Sales on the first line – deduct marketplace sales in Exempt Sales on the second line.
OklahomaYesTaxable sales exceeding $10,000YesInclude facilitator sales under Sales Price of Tangible Personal Property – deduct marketplace sales by listing them under Other – Marketplace Facilitator.
PennsylvaniaYesMeeting or exceeding $100,000 in gross salesNoN/A
Rhode IslandYesMeeting or exceeding $100,000 or 200 transactionsNoN/A
South CarolinaYesSales exceeding $100,000NoN/A
South DakotaYesSales exceeding $100,000YesInclude marketplace facilitator sales in Gross Sales Amount on line 1 – deduct them in exemptions on line 3.
TennesseeYesSales exceeding $100,000NoN/A
TexasYesSales exceeding $500,000YesReport marketplace facilitator sales in Gross Sales – omit them from Taxable sales in the second column.
UtahYesSales exceeding $100,000 or 200 transactionsNoN/A
VermontYesMeeting or exceeding $100,000 in sales or 200 transactionsNoN/A
VirginiaYesMore than $100,000 in gross sales or 200 transactionsNoN/A
WashingtonYesExceeding $100,000 in salesYesFor Business and Occupation tax: Include marketplace facilitator sales, do not deduct them. Do the same for litter tax.
Gross amount for Excise Tax will include marketplace facilitator sales, but are deducted from taxable sales.
West VirginiaYesSales exceeding $100,000 or 200 or more transactionsYesInclude marketplace sales in Gross Sales on line 1 column A – Deduct them on line 1 column B.
WisconsinYesSales exceeding $100,000YesInclude marketplace sales in Gross on line 1 – deduct them in Exemptions on line 5 – Other.
WyomingYesSales exceeding $100,000 or 200 or more transactionsNoN/A

Ali Walker

Ali Walker is a writer and overall content creator at Boswick Enterprises, specializing in sales tax education and resources for businesses. Through her work at SalesTaxSolutions.US, Ali strives to cover all aspects of the ever-evolving world of sales tax, providing insights and guidance to business owners.

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