Avalara > Blog > Sales and Use Tax > Marketplace facilitators will soon be responsible for tax on third-party sales in North Carolina

Marketplace facilitators could soon be responsible for tax on third-party sales in North Carolina


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North Carolina is getting closer to making marketplace facilitators liable for the tax on third-party sales made through the marketplace.

In fact, the North Carolina Legislature already tried doing so with House Bill 966. However, it’s now in political limbo. Governor Ray Cooper vetoed H966 in June, calling it “a bad budget with the wrong priorities” (his objections weren’t tied to the marketplace sales tax collection requirement). The House tried but failed to override the veto in September and has now placed the bill on the calendar for October 30, 2019.

Given the uncertain future of H966, it’s worth keeping an eye on Senate Bill 622, which would also make marketplace facilitators responsible for collecting and remitting tax on all their marketplace sales. It was approved by the Senate in May.

Under both H966 and S622, a marketplace facilitator is considered the retailer if, in the previous or current calendar year, it has:

  • More than $100,000 in gross sales in North Carolina; or
  • At least 200 separate transactions in North Carolina

When calculating sales in the state, a marketplace facilitator should count all sales, including those facilitated on behalf of marketplace sellers. It appears that remote retailers would also include all sales into North Carolina when calculating the threshold — both direct sales and marketplace sales.

Marketplace facilitators meeting the above threshold would be required to collect and remit tax on behalf of all marketplace sellers, regardless of whether the seller:

  • Has a physical presence in North Carolina
  • Is required to be registered to collect North Carolina sales tax
  • Collects and remits tax on sales not made through a marketplace

Both bills describe marketplace sellers as the wholesaler for marketplace transactions if the marketplace facilitator is collecting and remitting sales or use tax on their behalf.

Both bills also include a monthly reporting requirement for marketplace facilitators. No later than 20 days after the end of each calendar month, marketplace facilitators would have to provide (or make available) to each marketplace seller the gross sales of marketplace-facilitated sales, and the number of separate marketplace-facilitated transactions.

Marketplace facilitators wouldn’t be liable for failure to collect the proper tax due under either bill, provided they can demonstrate the error was due to incorrect information from the marketplace seller, and the facilitator didn’t receive specific written advice for the transaction at issue from the Secretary. They would also be protected from class actions related to the overpayment of the sales or use tax they collect on facilitated sales.

Neither measure prohibits a marketplace facilitator and marketplace seller from entering into an agreement regarding sales tax collection and remittance, “except that an agreement may not require a marketplace seller to collect and remit sales tax on marketplace-facilitated sales.” Presumably, sellers can opt to collect and remit the tax themselves.

The marketplace collection requirements described in H966 and S622 would not apply to certain accommodations facilitators, admissions facilitators, or service contractor facilitators.

Marketplace facilitator legislation like the bills under consideration in North Carolina have been adopted in 36 states and the District of Columbia. North Carolina will likely jump on this marketplace sales tax wagon soon.

Learn more about sales tax collection requirements in this state-by-state guide.


Sales tax rates, rules, and regulations change frequently. Although we hope you'll find this information helpful, this blog is for informational purposes only and does not provide legal or tax advice.
Avalara Author
Gail Cole
Avalara Author Gail Cole
Gail Cole began researching and writing about sales tax for Avalara in 2012 and has been fascinated with it ever since. She has a penchant for uncovering unusual tax facts, and endeavors to make complex sales tax laws more digestible for both experts and laypeople.