Selling primarily through marketplaces like Amazon, Etsy, or Walmart can ease your sales tax burden, but it doesn't eliminate it completely. Understanding how marketplace sales impact your tax responsibilities keeps your business compliant—and stress-free.
What are Marketplace Transactions?
Marketplace transactions happen when you sell products via third-party platforms that handle payment and shipping logistics. Popular marketplaces include Amazon, eBay, Walmart, and Etsy. Generally, these platforms collect and remit sales tax on your behalf, simplifying your compliance requirements.
Economic Nexus and Your Marketplace Sales
However, marketplace sales often count toward determining whether you've met economic nexus thresholds. Each state varies:
- California: Includes marketplace transactions in nexus calculations.
- Pennsylvania: Excludes marketplace transactions from nexus calculations.
- Alabama: Considers retail sales only, not distinguishing marketplace sales explicitly.
Understanding each state's approach helps you quickly identify where you might need a sales tax permit.
Met Nexus Due to Marketplace Sales—Now What?
Even if marketplace sales push you over a state's nexus threshold, your direct sales tax liability is usually minimal. Because marketplaces typically handle sales tax collection and remittance, you'll only owe tax on any direct retail sales outside those platforms. Some states, like Utah and West Virginia, even exempt marketplace-only sellers from registration.
Staying Ahead with Marketplace Sales Tax
Managing sales tax compliance doesn't have to be complicated. You can handle returns yourself or partner with a trusted specialist like TaxValet. Either way, understanding how marketplace sales influence your responsibilities helps your business grow confidently. If you need help, TaxValet’s team is ready to make your sales tax headaches disappear!