Pre-Wayfair Sales Tax Exposure: A New Reality for Marketplace Facilitators

For years, the sales tax story around marketplace facilitators felt settled. After South Dakota v. Wayfair, the industry adapted quickly. Physical presence was no longer a pre-requisite to sales tax obligation, so states rolled out marketplace facilitator sales tax laws, shifting responsibility from individual sellers to the platforms facilitating the transactions. Compliance became more centralized, and states began capturing long-missed revenue.

But now, states are flipping back to previous chapters and changing the story as we know it.

A growing wave of court decisions suggests a new (and uncomfortable) reality: Wayfair retroactive sales tax exposure may exist—not because of new laws, but because of how old laws are being interpreted today.

The Core Issue: Is This Really “Retroactive Tax”?

There is a lot of statutory interpretation going on regarding this question. States are not, in most cases, passing laws that explicitly impose retroactive tax obligations. That would raise serious constitutional concerns and was specifically avoided in Wayfair. Instead, states—and more importantly, courts—are asking a different question:

Did existing statutes already require marketplace facilitators to collect sales tax before marketplace facilitator laws existed?

If the answer is yes, then this isn’t technically retroactive taxation. It’s delayed enforcement of an existing obligation. And while that might seem like a very nuanced, even abstract argument, it carries with it a great deal of inherent risk.

Amazon v. South Carolina: Control Equals Responsibility

In a closely watched 2026 decision, the South Carolina Supreme Court ruled that Amazon was liable for more than $12 million in marketplace facilitator tax for Q1 2016—years before both Wayfair (2018) and South Carolina’s marketplace facilitator statute (2019).

But how is it possible that Amazon could be responsible for sales tax collection years before the laws were in place?

The court didn’t rely on the later law. Instead, it looked at preexisting statutory language requiring tax collection from anyone “engaged in the business of selling.” The court also emphasized Amazon’s control over pricing, payment processing, customer communication, returns, and distribution of proceeds. In other words: Amazon wasn’t just a passive intermediary, but was functionally the seller.

This is where language and loopholes meet. Although marketplace facilitator laws were not in effect in 2016, it didn’t matter in this argument. The court did not need a retroactive law because it interpreted the existing statute as applicable to Amazon at the time.

StubHub v. Wisconsin: Focus on Clarification

Wisconsin did something similar, but with a slightly different statutory angle.

In StubHub, Inc. v. Wisconsin Department of Revenue, the court held the platform liable for sales tax, penalties, and interest on transactions from 2008–2013—despite the state’s marketplace provider law not taking effect until 2020. The key argument was this: the marketplace provider law didn’t create a new obligation—it clarified what the law already meant.

That distinction—clarification vs. change—is incredibly powerful for states. If a court agrees that a newer statute merely clarifies prior law, then liability for earlier periods can become fully enforceable.

And just like Amazon, StubHub’s level of control over the transaction (payment processing, fee extraction, and fund distribution) made it look less like a platform and more like a seller.

Are States Actively Targeting Pre-Wayfair Periods?

Increasingly, yes. But not arbitrarily.

States can’t magically resurrect pre-Wayfair obligations. They still need a statutory foundation, a defensible legal theory, an audit trail, and a court willing to say that preexisting law already applied. But as we have seen with South Carolina and Wisconsin, there is more confidence that this is now possible. These recent rulings provide a roadmap for states to argue that marketplace facilitator sales tax obligations existed long before marketplace laws were enacted.

This is what marketplace facilitators (and sellers) need to be aware of. The compliance question is shifting from “When did the law start?” to “What did the law already require?”

What this Means for Marketplace Sellers

If you’re a seller using a marketplace facilitator, it would be nice if this were just the platform’s problem. Unfortunately, it’s not.

While the Amazon and StubHub cases focused on facilitator liability, other rulings show that sellers themselves are not immune—especially where physical presence existed.

Washington is a useful example. In a 2024 decision involving Amazon FBA sellers, the court upheld assessments for 2011-2018 based on inventory stored in-state. The key takeaway was that inventory storage created physical nexus, and physical nexus was a pre-Wayfair tax obligation. The court also observed that Washington enacted a marketplace facilitator law in 2019, and reasoned that if the legislature believed facilitators were already required to collect before that law, it would not have needed to enact new provisions.

In other words, due to nexus and Washington’s interpretation of the statute, the burden of tax became the responsibility of the sellers using the platform. And this creates an uncomfortable potential for exposure. Even though marketplace facilitator laws now shift collection responsibility from sellers, they do not erase historical exposure. So if you stored inventory in fulfillment centers or had property or operations in a state pre-2018, you may still have retroactive sales tax risk on the table.

What Should Businesses Do Now?

This is definitely not the time to drop everything and panic. However, it is time to get organized and proactive.

At a minimum, businesses should be evaluating historical transaction data, contracts, inventory locations, and marketplace terms. In this environment, “we thought the platform handled it” is a defense that often arrives without court favor. The better move is a proactive review of prior periods before a state does the reviewing for you.

If you’re unsure where your historical exposure stands, this is exactly where expert guidance matters. SalesTaxSolutions.US can help you assess risk, identify gaps, and build a defensible compliance strategy before you’re in hot water.