Avalara > Blog > Sales and Use Tax > Amazon to defend itself “vigorously” from South Carolina assessment on marketplace sales

Amazon to defend itself “vigorously” from South Carolina assessment on marketplace sales


Selling through a marketplace has its perks: Marketplace facilitators such as Amazon and Walmart are household names; most marketplace sellers are not. Marketplace facilitators can store inventory, process payments, and handle shipping and returns for third-party sellers. Perhaps best of all, for sellers, is that marketplace facilitators in some states are required to collect and remit sales tax on their sellers’ behalf.

But that’s not always the case; and in states where marketplaces are now required to collect and remit tax for third parties, it wasn’t always so. Consequently, more than one marketplace facilitator is fighting a sales tax assessment for marketplace sales tax in more than jurisdiction.

One of the most publicized cases is between Amazon and South Carolina.

In September of this year, a South Carolina administrative law judge (ALJ) found Amazon liable for approximately $12.5 million in unpaid sales tax on its third-party sales in the state from January 1, 2016, through March 31, 2019. The final assessment could be much higher; Amazon didn’t start handling sales tax for third-party sellers until South Carolina’s marketplace facilitator law took effect on April 29, 2019.

Amazon didn’t immediately respond to the ALJ ruling, and it hasn’t issued a public statement on the South Carolina case. That said, if Amazon’s quarterly report for the second quarter of 2019 is any indication, it’s prepared to fight the assessment to the end: “We intend to defend ourselves vigorously in this matter.” And indeed, Amazon filed an appeal from the administrative law court to circuit court on October 10, 2019. Learn more about the ongoing dispute between Amazon and South Carolina.

Another pertinent case is making its way through the courts of Louisiana. The Bayou State doesn’t currently require marketplace facilitators to collect and remit tax on third-party sales. However, the home-rule jurisdiction of Jefferson Parish is holding the Walmart marketplace liable for uncollected tax on its third-party sales in the parish.

Walmart has a physical location in Jefferson Parish, and it collects and remits tax on direct sales there. Yet, like Amazon, Walmart claims it isn’t responsible for the tax on its third-party sales.

There are differences between the two cases, described here. But in both scenarios, the marketplace facilitators are fighting assessments for back taxes on marketplace sales. If South Carolina and Jefferson Parish win, other states and home-rule jurisdictions could hold marketplace facilitators liable for back taxes on third-party sales.

Marketplace facilitator laws provide much-needed clarity

Today, more than 36 states have laws requiring marketplace facilitators to collect and remit sales tax on behalf of their third-party sellers. Several other states are considering similar laws.

Like them or not, marketplace facilitator laws help clarify who’s responsible for sales tax collection and remittance.

Learn more in Avalara’s state-by-state guide to marketplace facilitator laws and state-by-state guide to registration requirements for marketplace sellers.


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.