The rise of e-commerce platforms such as Amazon, Etsy, Walmart Marketplace, and Shopify has reshaped how goods are sold in the U.S. One of the key regulatory shifts in recent years is the introduction of Marketplace Facilitator Laws by many states, fundamentally changing the tax compliance landscape for sellers.
Whether you’re a small business owner, a third-party seller, or a CPA advising clients in this space, understanding how marketplace facilitator laws work is essential to staying compliant and avoiding penalties.
What Is a Marketplace Facilitator?
A marketplace facilitator is a business or platform that contracts with third-party sellers to promote the sale of physical property, digital goods, or services. These platforms not only host sellers but also handle payment processing, shipping, customer service, and in many cases, sales tax collection and remittance on behalf of the seller.
Examples of marketplace facilitators include:
- Amazon
- Walmart Marketplace
- Etsy
- eBay
- Shopify (when it acts as both a platform and payment processor)
What Do Marketplace Facilitator Laws Require?
Marketplace facilitator laws require these platforms to collect and remit sales tax on behalf of third-party sellers in states where such laws are enacted. This removes the burden of sales tax collection from individual sellers operating on these platforms, at least in theory.
However, not all states define “facilitator” the same way, and requirements vary based on:
- Whether the platform has physical or economic nexus
- The type of goods sold
- The threshold for sales or transactions in the state
PEAK Business Consultancy Services, with deep expertise in U.S. sales tax compliance, supports CPA firms and e-commerce sellers in navigating these complex requirements. We help clients understand who bears the responsibility and ensure proper registration and reporting. Learn more about how we assist U.S. CPAs.
States That Enforce Marketplace Facilitator Laws
As of 2025, nearly every U.S. state with a sales tax has enacted a version of marketplace facilitator legislation. For example:
- California: Enacted April 1, 2019
- Texas: Enacted October 1, 2019
- New York: Enacted June 1, 2019
- Florida: Enacted July 1, 2021
Each state sets its own thresholds (e.g., $100,000 in sales or 200 transactions), so monitoring activity across platforms and jurisdictions is critical.
What Sellers Must Know
1. Platform Compliance Doesn’t Mean Seller Is Off the Hook
Even though facilitators collect and remit sales tax, sellers are often still required to:
- Register for a sales tax permit in some states
- File “zero return” sales tax filings
- Track and report exempt sales (e.g., wholesale, resale)
2. Know Your Nexus
If you sell on multiple platforms and/or through your own website, you may still be responsible for collecting and remitting sales tax independently. You must evaluate your economic nexus and physical nexus exposure in every state you sell into.
3. Recordkeeping Is Critical
Maintain clear documentation of what taxes your platform is collecting, what states they’re remitting to, and what items are exempt. States often require sellers to distinguish between platform-collected sales and direct sales.
4. Understand Reporting Obligations
Even when the marketplace remits tax, you may be required to file informational returns or reconcile your sales reports with tax filings. Some states impose penalties for non-filing, even on $0 tax due.
How PEAK Business Consultancy Services Can Help
At PEAK Business Consultancy Services, we offer specialized support for CPA firms and sellers navigating the complexities of U.S. sales tax laws, including marketplace facilitator rules.
- We help sellers determine nexus and registration requirements
- We prepare and file sales tax returns across multiple states
- We reconcile platform-collected tax with your own records
- We assist CPAs with back-end compliance and audit support
Our experienced India-based tax professionals have successfully supported U.S. CPAs and e-commerce businesses across various industries. Click here to partner with PEAK for reliable and efficient tax compliance.
Marketplace Facilitator vs. Direct Seller: Key Differences
| Aspect | Marketplace Facilitator | Direct Seller |
|---|---|---|
| Sales Tax Collection | Required to collect and remit on behalf of sellers | Seller is responsible for collecting and remitting |
| Tax Filing Obligation | Files in applicable states | May still need to file informational or $0 returns |
| Nexus Threshold | Subject to state-specific economic thresholds | Also must track economic and physical nexus independently |
Conclusion
The advent of marketplace facilitator laws has simplified sales tax collection for many e-commerce sellers, but it has also introduced new obligations and risks. Staying informed, maintaining accurate records, and understanding multi-state compliance are crucial steps to avoid audit penalties and stay ahead of the curve.
Don’t navigate marketplace tax compliance alone. PEAK Business Consultancy Services offers expert outsourcing solutions for CPA firms and sellers across the U.S., ensuring peace of mind and full compliance. Partner with us for efficient and accurate tax support.
