Tools and resources to help marketplace sellers figure out sales tax obligations
How do legislative changes to sales tax laws affect marketplace sellers?
With the recent wave of new rules, it can be challenging to understand your sales tax obligations when selling into states. It gets even more complicated when some or all of your sales are made via a marketplace facilitator, such as Amazon, Etsy, or eBay. The resources below are designed to help you understand which sales tax laws impact businesses that sell through a marketplace, what you need to pay attention to, and how to stay compliant with sales tax when selling through an online marketplace.
Marketplace seller essentials
Not too long ago, a state could only require sellers with a physical presence in that state to collect and remit sales tax. With the increase in ecommerce (both owned channels and online marketplaces), many states realized they were missing out on potential sales tax revenue. States have started to enforce new marketplace facilitator laws and economic nexus laws to enable the collection of sales tax from remote sellers and marketplace facilitators.
Historically, the responsibility to collect and remit sales tax has fallen on the seller. Marketplace facilitator laws shift this obligation from the marketplace seller to the platform that facilitates the sale (e.g., Amazon, Etsy, or eBay). These laws are significant for marketplace sellers because a portion of their sales may be taxed and remitted on their behalf by marketplace facilitators in states with such laws, ultimately complicating their sales tax compliance process.
In June 2018, the Supreme Court of the United States ruled in favor of South Dakota in South Dakota v. Wayfair, Inc. This decision allows states to tax remote sellers if they meet economic nexus thresholds for the state — typically in the form of number of transactions and/or sales volume. Since the ruling, almost every state with a general sales tax is now enacting or enforcing economic nexus laws that can impact businesses that sell via an online marketplace.
A state-by-state guide to registration requirements for marketplace sellers
Many marketplace sellers ask, Do I need register with a state if all my sales into that state are via a marketplace that’s already collecting for me? Like many issues related to sales tax, it depends. Read our state-by-state guide to registration requirements for marketplace sellers.
Different states, different rules
Whether you need to remit sales tax from your marketplace store depends on which states you sell to. See how rule sets in Avalara AvaTax can help you correctly apply sales tax, based on state laws.
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Tools to get sales tax compliant
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