Marketplace facilitator tax rules have shifted the responsibility for collecting and remitting sales tax from sellers to platforms like Amazon, eBay, and Etsy in most states.
But the rules are not uniform, and confusion about who collects what can lead to compliance gaps or double taxation.
If you sell through multiple channels, understanding where the marketplace handles tax and where you remain responsible is critical. Getting it wrong means audit risk, penalties, or overcharging your customers.
This guide breaks down marketplace facilitator tax laws state by state. You will learn which platforms collect on your behalf, where gaps exist, and how to stay compliant.
A marketplace facilitator is any platform, like Amazon, Walmart, or eBay, that lists products for third-party sellers, processes payments, and delivers orders to buyers.
If you sell through these platforms, they are legally required to collect and remit ecommerce sales tax on your behalf in most states.
A marketplace seller is any business or individual selling products through a facilitator’s platform. For example, if you sell on Amazon, Amazon collects and remits sales tax for those transactions in states where it is required by law.
However, this only applies to sales made through the marketplace. If you also run your own Shopify store, sell via your website, or use other direct channels, you are responsible for collecting and remitting sales tax on those sales, even if the buyer is in a state where Amazon collects for you.
Many sellers use accounting integrations to reconcile platform-collected taxes with their own records, ensuring nothing slips through.
Understanding this split is essential. Next, let us look at what happens when sellers get it wrong.
Mistakes with marketplace facilitator tax can lead to audits, penalties, back taxes, and even account suspension.
State tax authorities take sales tax seriously. If you do not collect tax where required, or if a marketplace fails to collect on your behalf, the state sees it as lost revenue. The consequences are real and costly:
Understanding these risks helps you spot the warning signs. Many costly errors come from common misconceptions about how these laws work.
Suggested read: Square Sales Tax Compliance: Avoiding Costly Mistakes
Assuming “the platform handles everything” or “laws are the same everywhere” is a recipe for costly mistakes.
Here are the top misconceptions that trip up sellers:
Platforms collect tax on sales through their marketplace in states where they have a legal obligation. This does not mean every state or every sale.
If a platform has not reached an economic nexus threshold in a state, or if local rules exempt certain transactions, the platform may not be collecting. Sellers are always responsible for direct sales.
Suggested read: Nexus Rules by State: Stay Compliant
Each state with a sales tax has its own marketplace facilitator law. They differ in definitions, thresholds, and enforcement dates.
For example, California uses a $500,000 threshold, while many states use $100,000 or 200 transactions. There is no national standard.
In some states, you may not need to register if all your sales are through a marketplace that collects for you. However, if you have physical presence (like inventory in a state), or make direct sales, you may still need a seller’s permit or have other filing obligations.
Always verify with each state’s Department of Revenue before assuming you are covered.
Only regular reconciliation, often automated, can verify that platforms are collecting and remitting the correct tax on your behalf. Errors or missed transactions can still leave you exposed.
So how do you know what applies to you? Use the decision tree below.
Suggested read: Ultimate Guide for Ecommerce Tax Filing in 2025
You can diagnose your tax obligations in three steps.
To clarify your responsibilities, ask:
|
Seller type |
Who collects tax? |
What to do next |
|
Marketplace only |
Platform (in most states) |
Confirm platform compliance |
|
Marketplace + own store |
Platform + Seller |
Collect on direct sales |
|
Direct sales only |
Seller |
Register and collect as needed |
Table 1: Tax liability by seller type
Checklist:
Once you know your basic obligations, state-by-state differences add another layer of complexity.
Suggested read: Shopify Seller’s Sales Tax Roadmap: From Launch to Multi-State
Every state’s rules are different; tracking thresholds and enforcement dates is essential for compliance.
States set their own economic nexus thresholds, enforcement dates, and platform coverage. Here is a comparison of five major states:
|
State |
Sales threshold |
Transaction requirement |
Key notes |
|
California |
$500,000 |
None |
Applies to all marketplace facilitators regardless of seller size |
|
Texas |
$500,000 |
None |
Marketplace providers cannot use single local tax rate; must calculate destination-based rates |
|
Florida |
$100,000 |
None |
Based on previous calendar year sales into the state |
|
New York |
$500,000 |
100+ transactions |
Must meet both thresholds; applies to tangible personal property and taxable services |
|
Illinois |
$100,000 |
200 transactions |
Either threshold triggers collection obligation; includes cumulative sales from facilitator and sellers |
Table 2: Marketplace facilitator tax by state
Webgility’s Avalara integration automates state-by-state tax mapping and keeps your compliance up to date. As you expand across states and platforms, complexity increases.
Let us look at what changes when you sell on multiple channels.
Multi-channel selling means you cannot assume tax is handled, and responsibilities vary by platform and state.
Amazon collects and remits tax on marketplace sales in most states. For your Shopify store, you are responsible for collecting and remitting tax wherever you have nexus. You must track which sales are covered by Amazon and which require your action.
Both platforms collect tax in most states, but coverage and timing may differ. Always confirm each platform’s compliance in every state where you sell.
If you sell only through your own stores (Shopify, WooCommerce, etc.), you are responsible for collecting and remitting sales tax in every state where you have nexus.
Action steps for every scenario:
Webgility centralizes order and tax data across all channels, ensuring nothing falls through.
As your channels grow, operational best practices become essential to keep everything on track.
Suggested read: Understanding Ecommerce Sales Tax Laws
Proactive documentation, reconciliation, and regular review are your best defense against costly marketplace facilitator tax mistakes.
Quarterly compliance checklist:
Maintaining a sales reconciliation log and documentation is critical for audit defense. Automated tools like Webgility let you reconcile orders, payouts, and taxes by channel in minutes.
Webgility automates tax mapping, reconciliation, and documentation to save time, reduce errors, and future-proof compliance.
It also maps tax lines by jurisdiction, so you always know which orders are covered by platform collection and which require your action. Real-time reconciliation connects orders, payouts, and tax across all your platforms, eliminating manual work and reducing errors.
With the Avalara integration, Webgility automates state-by-state compliance, keeping your tax mapping up to date as laws change. Schedule a demo today.
Marketplace facilitator tax laws require platforms like Amazon or eBay to collect and remit sales tax for sales made through their sites. However, you’re still responsible for tax on direct sales through your own store.
Not always. If all your sales are through marketplaces that collect tax for you, some states do not require registration. If you have a physical presence or direct sales, you may need to register. Always check each state’s requirements.
You could face back taxes, penalties of 5-10%, and interest. States may audit up to 3-5 years back, and platforms may suspend your account until you resolve the issue.
Yes. Tools like Webgility automate tax mapping, reconciliation, and documentation across all your sales channels, saving time and reducing compliance risk.