Marketplace Facilitator Guide
Understanding which platforms collect sales tax for you and when you're responsible for collection yourself.
What is a Marketplace Facilitator?
A marketplace facilitator is a platform that facilitates sales between third-party sellers and customers. Many states now require these platforms to collect and remit sales tax on behalf of sellers.
This means if you sell on platforms like Amazon or eBay, the platform may handle sales tax collection for you in states where marketplace facilitator laws exist. However, you may still be responsible for other states.
Major E-Commerce Platforms
Amazon (FBA & FBM)
Amazon collects and remits sales tax on behalf of third-party sellers in all states that have marketplace facilitator laws (which is nearly all states with sales tax).
- What Amazon handles: Sales tax collection and remittance in marketplace facilitator states
- Your responsibility: Very limited - Amazon handles most of it
- Applies to: Both FBA (Fulfilled by Amazon) and FBM (Fulfilled by Merchant)
- Important: Check your Amazon Seller Central reports to see exactly where Amazon is collecting
eBay
eBay collects sales tax on behalf of sellers in most states with marketplace facilitator laws.
- What eBay handles: Sales tax collection in marketplace facilitator states
- Your responsibility: Monitor which states eBay is collecting in
- Note: eBay started collecting in 2019 and has expanded coverage since then
Etsy
Etsy collects sales tax in states where they have established nexus or where marketplace facilitator laws apply.
- What Etsy handles: Sales tax collection in covered states
- Your responsibility: May need to collect in states where Etsy doesn't
- Check: Etsy's Help Center for current list of states where they collect
Shopify
Shopify is NOT a marketplace facilitator. It's a platform that helps you run your own store. You are responsible for sales tax collection and remittance.
- What Shopify provides: Tools to help you collect sales tax
- Your responsibility: Register for permits, configure tax settings, file returns
- Advantage: Shopify has built-in tax calculation features
- Consider: Using Shopify's tax calculation API or third-party apps like TaxJar or Avalara
WooCommerce
WooCommerce is NOT a marketplace facilitator. It's a WordPress plugin for building your own store. You handle all tax obligations.
- What WooCommerce provides: Basic tax calculation settings
- Your responsibility: Everything - registration, collection, filing, remittance
- Recommendation: Use tax automation plugins like TaxJar, Avalara, or TaxCloud
Do I Need to Collect Tax?
- Amazon/eBay/Etsy: They likely handle it → Go to Step 2
- Shopify/WooCommerce/Your own site: You handle it → Go to Step 3
- Check the platform's seller dashboard for which states they collect in
- For states NOT covered by the platform, you may need to collect yourself
- If you have nexus in a state the platform doesn't cover, register and collect
- Determine where you have nexus (use our Nexus Checker tool)
- Register for sales tax permits in those states
- Configure your platform to collect the correct tax rates
- File returns according to each state's schedule
State Marketplace Facilitator Laws
Nearly all states with sales tax now have marketplace facilitator laws. This means platforms like Amazon and eBay are required to collect sales tax on behalf of third-party sellers.
Important: Even if a platform collects in most states, you may still have filing obligations or need to collect in states where the platform doesn't operate.
Common Questions
Q: If Amazon collects tax, do I still need to register for a sales tax permit?
Generally no for states where Amazon collects on your behalf. However, if you have nexus in states where Amazon doesn't collect (rare), or if you sell on other channels, you may need permits. Check with a tax professional.
Q: What if I sell on both Amazon AND my own Shopify store?
Amazon handles tax for Amazon sales, but you must collect and remit tax for your Shopify sales in states where you have nexus. You'll need to register, configure Shopify's tax settings, and file returns.
Q: How do I know which states my marketplace is collecting in?
Check your platform's seller dashboard or help center. Amazon, eBay, and Etsy all provide lists of states where they collect. This information is usually in the "Tax Settings" or "Reports" section.
Q: Can I still get audited if the marketplace collects tax for me?
Yes, but less likely. When a marketplace collects on your behalf, they assume the liability. However, you may still be audited for other aspects of your business or for sales on other channels.
Need Help Tracking Your Nexus?
Use our free tools to determine where you have nexus and track your sales tax obligations.
Check out our partner tool: annotatefast.app