What it is

A marketplace facilitator is a platform that lists products from third-party sellers and handles the transaction — and, under marketplace facilitator laws, is legally required to collect and remit sales tax on the sales it facilitates on behalf of those sellers. Amazon, Etsy, Walmart, and eBay are the best-known examples.

These laws are a direct consequence of the 2018 South Dakota v. Wayfair decision, which let states tax remote sellers based on economic activity. Rather than chase thousands of individual marketplace sellers, states made the platform the collection point. Today all 46 states (plus Washington, D.C.) that levy a sales tax require marketplace facilitators to collect and remit on their third-party sellers’ transactions.

For the seller, this is genuinely helpful: on the portion of your sales that flow through a covered marketplace, the platform calculates, collects, and remits the tax for you. You don’t file those amounts yourself. But — and this is the part sellers misread — that convenience does not automatically erase your own obligations.

Why it matters to a multi-state seller

The trap is assuming “Amazon collects for me, so I have nothing to do.” Two things keep you on the hook:

1. Facilitated sales can still count toward your economic nexus threshold. Many states measure the threshold against your total sales into the state, including marketplace-facilitated sales. So your Amazon volume can push you over a state’s line even if Amazon is remitting the tax. Crossing that line can require you to register and file returns in the state — sometimes zero returns that simply report the facilitated sales as already-collected — even though you owe nothing extra. 2. Direct sales aren’t covered. Any sales you make through your own website are not facilitated. If your combined footprint creates nexus, you must collect and remit on those direct sales yourself.

Whether facilitated sales count toward your threshold, and whether you must register or file a zero return, varies by state — which is exactly why a nexus determination matters once you sell across both channels.

Worked example

Say a brand sells in a state with a $100,000 economic nexus threshold:

• Amazon (facilitated): $90,000 → Amazon collects and remits this tax automatically.
• Own Shopify store (direct): $30,000 → you collect this yourself if you have nexus.

Looking only at the channel you control, $30,000 is far under $100,000, so it’s tempting to conclude “no nexus.” But the state counts total sales: $90,000 + $30,000 = $120,000, which is over the threshold. Result: you have economic nexus, you must register, you collect and remit on the $30,000 of direct sales, and you may have to file returns reporting the $90,000 of facilitated sales (with the tax shown as collected by Amazon). The marketplace’s collection didn’t remove your registration duty — it was the thing that helped push you over the line.

How this connects to staying compliant

Marketplace facilitator laws simplify collection on covered channels but complicate nexus tracking. To stay compliant you need to: (1) track your total sales by state, marketplace and direct combined, against each state’s threshold; (2) determine, per state, whether facilitated sales count toward the threshold and whether registration or a zero return is required; (3) collect and remit yourself on all non-facilitated (direct) sales wherever you have nexus; and (4) keep documentation showing which tax the marketplace remitted versus which you did.

The clean mental model: the marketplace handles the tax on its own sales, but you still own your nexus and your direct channel.

Sources: Avalara — State-by-state guide to marketplace facilitator laws: https://www.avalara.com/us/en/learn/guides/state-by-state-guide-to-marketplace-facilitator-laws.html TaxJar — Marketplace facilitator laws, explained: https://www.taxjar.com/sales-tax/marketplace-facilitator-laws Streamlined Sales Tax — Marketplace Facilitator State Guidance: https://www.streamlinedsalestax.org/for-businesses/marketplace-facilitator