What are marketplace facilitator laws
Marketplace facilitator laws are US state rules that generally require the platform, rather than the third-party seller, to calculate, collect and remit sales tax on taxable sales made through that platform. All 45 states with a statewide sales tax, plus the District of Columbia, have such a rule. Your own direct channels, some state registrations and your record-keeping stay with you.
What the laws require
Marketplace facilitator laws move sales tax collection from thousands of individual sellers to the platform that hosts their sales. Before they existed, states struggled to enforce collection on small sellers who might each owe a few hundred dollars a year. Shifting the duty to a handful of large platforms solved that enforcement problem.
The change followed the 2018 Supreme Court decision in South Dakota v. Wayfair, which allowed states to require out-of-state sellers to collect tax without a store or warehouse in the state. By June 2021, all 45 states with a statewide sales tax and D.C. had economic-presence rules, and all but one had also shifted primary collection from marketplace sellers to the company facilitating the sale. The five states without a statewide sales tax (New Hampshire, Oregon, Montana, Alaska and Delaware) have no statewide facilitator rule. Alaska is a partial exception, because participating local jurisdictions coordinate remote-seller and marketplace collection.
In practice the platform calculates the rate from the ship-to address and the state’s product classification, adds the tax at checkout, files returns and pays the state, and keeps transaction records broken down by seller.
Who counts as a facilitator
A facilitator is, in general, a business that lists or advertises third-party products and collects payment from the customer on the seller’s behalf. Definitions are set state by state. Florida’s version covers a person who lists or advertises a seller’s goods and, directly or through third parties, collects the customer’s payment and passes it on to the seller, whether or not it is paid for the service. It excludes pure payment processors and persons who solely provide travel agency services. A delivery network company is excluded unless it is a registered dealer and tells its local merchants it is subject to the rules. Florida treats a provider with a physical presence, or a substantial number of remote sales, as a dealer, and requires it to certify to its sellers that it will collect and remit the tax.
Under definitions like Florida’s, the test follows the order channel, not the logo on the checkout. A business that sells its own products, sets its own prices and collects payment directly, or through a provider that does no listing or advertising, is a seller.
What stays with you
| ORDER CHANNEL | WHO COLLECTS AND REMITS | WHAT YOU STILL DO |
| Third-party marketplace order | The qualifying facilitator, when the destination state’s rule applies. | Keep the collection proof. Check state registration and reporting rules. |
| Your own website | You. Hosted storefront software or a payment processor does not turn it into a marketplace sale. | Register, collect, remit and file wherever you have obligations. |
| Wholesale, trade show or other off-platform sale | You, unless another documented collection rule covers that transaction. | Keep this revenue apart from facilitated sales. Test nexus and taxability by state. |
| Inventory stored in a state through a fulfilment network | The facilitator collects tax on the sale itself. | Stored stock can create physical presence, so you may still need to register there. |
| Gross receipts / income-type taxes (e.g. Washington B&O) | You, even on facilitated sales. | Report and pay these taxes when required; marketplace sales-tax collection does not shift this liability. |
Florida shows how the split works in a statute. A seller may not collect tax on a sale made through a marketplace whose provider has certified it will collect, and must leave that sale off its own return. A seller with a physical presence, or a substantial number of remote sales, must still register and collect on sales made outside the marketplace, and only those outside sales count when testing the remote-sales threshold. The state may audit and assess the seller for outside sales, but not for facilitated sales, unless the provider seeks relief.
Under Florida’s statute, liability can shift back to the seller or customer. A provider is relieved of tax liability where it made a reasonable effort to obtain accurate information and the error resulted from incorrect or incomplete information supplied by the seller, except in transactions between related parties or sales that are not at arm’s length. The seller or customer may then be liable. The provider and seller may also agree by contract that the provider can recover any tax, interest, and penalties it pays on the seller’s sales. A seller with more than $1 billion in annual US gross sales may agree to collect the tax itself if it is registered with the department, notifies the department, and the provider and seller agree by contract to this arrangement. The state cannot collect tax from both the provider and the seller on the same sale. Other states’ rules on liability relief, tax collection, and audits may differ.
The numbers behind the shift
| $3.2bn → $23.1bn reported US remote sales tax revenue, 2018 to 2021 | Reported revenue from all remote sales rose from about $3.2 billion in 2018 (21 states reporting) to about $23.1 billion in 2021 (33 states reporting). Revenue attributed to marketplace sales reached about $9.5 billion in 2021, around 41% of that total, but only 20 states supplied the marketplace figure. More states reporting explains part of the rise, and the figures do not separate the effect of facilitator laws from that of economic nexus rules. |
Sellers carry costs even where a platform collects. Software, audit and assessment costs rose with multistate collection, and some businesses could not comply by the effective dates, which left them exposed to liability for sales after those dates.
Six checks before you rely on a marketplace
- Identify the exact sales channel on each order.
- Confirm the platform marked the tax as collected and filed.
- Separate facilitated revenue from direct and off-platform revenue.
- Check whether the destination state counts marketplace sales toward your nexus threshold. Some include them and others exclude them, so one rule cannot be applied nationwide.
- Check whether the state still requires registration, a return or separate gross-sales reporting.
- Make sure you covered periods before the state’s facilitator law took effect.
Common errors follow from skipping these checks: charging tax a second time on a facilitated order, miscounting thresholds, assuming the platform’s product classification matches your own, and keeping no record of which sales were facilitated.
Frequently asked questions
Do marketplace facilitators collect on every transaction? Not necessarily. The marketplace facilitator must collect and remit tax on covered taxable transactions when the applicable state’s law requires it. The provider’s registration and collection requirements are distinct from the seller’s own registration obligations. Exempt products, transaction-specific exceptions, and state-specific rules may affect the result. Coverage of some local taxes and special fees varies by state, so do not assume the marketplace collects every tax or fee.
Do I need a sales tax permit if the marketplace collects? There is no national answer. Some states do not require a marketplace-only remote seller to register, while others require registration, gross-sales reporting or another return. Direct sales or physical presence can change the answer.
Does using a payment processor or tax tool on my own site make me a marketplace? No. Payment processing and tax calculation are different roles from operating a third-party marketplace, and you remain the seller.
