Updated – Originally published May 15, 2025
Sales tax laws change constantly, especially as shopping habits shift toward online and multi-channel selling. One of the biggest changes in recent years is the rise of marketplace facilitator laws for online sellers — rules that determine who is responsible for collecting and remitting sales tax when sales happen through a marketplace.
If you sell on platforms like Amazon, Etsy, eBay, or Walmart, these laws directly affect your sales tax obligations. Let’s break down what marketplace facilitator laws are, how they impact sales tax, and what marketplace sellers need to do to stay compliant.
What Are Marketplace Facilitator Laws?
Marketplace facilitator laws define when a platform — not the individual seller — is responsible for sales tax.
A marketplace facilitator is any company that creates a channel for other businesses or individuals to sell their products. Think of it like the organizer of a farmers’ market or swap meet: they bring sellers together, provide the space (physical or digital), and connect them with buyers. Today, that often looks like an online marketplace curating sellers and processing transactions on their behalf.
Under marketplace facilitator laws for online sellers, many states require the marketplace itself to calculate, collect, and remit sales tax for transactions that occur on the platform — as long as the marketplace meets certain thresholds. These laws shift sales tax responsibility away from individual sellers and onto the facilitator.
That doesn’t mean sellers are off the hook entirely — but it does change who does what.
How Marketplace Facilitator Laws Impact Sales Tax
The biggest change is who is responsible for sales tax.
Traditionally, sellers collected and remitted sales tax anywhere they had nexus. Under modern marketplace laws, the marketplace facilitator is usually responsible for sales tax for marketplace sellers when a transaction occurs on their platform.
This shift accelerated after the 2018 Supreme Court decision South Dakota v. Wayfair, which established that businesses — including marketplaces — can create economic nexus without a physical presence. In response, states moved quickly to pass marketplace facilitator legislation, and many of those laws are still evolving.
In most states today:
- The marketplace collects and remits sales tax on marketplace transactions
- Sellers remain responsible for sales tax on non-marketplace sales
- Sellers must keep accurate records of marketplace transactions, even when the platform handles tax
If you’re unsure whether you still need to register or file, our article on sales tax compliance and Do I Need to Register for a Sales Tax License? can help clarify your next step.
Does Amazon Collect and Pay Sales Tax for Sellers?
A common question we hear is: does Amazon collect sales tax for sellers?
In most states with marketplace facilitator laws, the answer is yes. Amazon sales tax for sellers is generally collected and remitted by Amazon on third-party sales shipped to those states.
This applies whether you use Seller Fulfilled Prime or Fulfillment by Amazon (FBA) — though FBA inventory can create nexus in additional states depending on where inventory is stored. Once Amazon meets a state’s economic nexus threshold (which it typically does), Amazon becomes responsible for collecting and remitting state-level sales tax on marketplace transactions.
That said, sellers are still responsible for:
- Sales tax on non-Amazon sales
- Understanding whether local taxes or special reporting requirements apply
- Maintaining documentation for audits
Does Etsy Collect and Remit Sales Tax for Sellers?
If you’ve ever asked, “does Etsy pay sales tax for me?”, the answer is generally yes — but with nuance.
Etsy sales tax for sellers is automatically calculated, collected, and remitted by Etsy for physical and digital items sold to buyers in the U.S., regardless of where the seller is located. The tax rate depends on how the item is listed and the buyer’s location.
Even though Etsy handles collection, sellers should still:
- Track total sales and tax collected
- Understand whether their state requires informational or zero-dollar returns
- Stay aware of changes to state reporting rules
Does eBay Handle Sales Tax for Sellers?
So, does eBay collect sales tax for sellers? In most cases, yes — for states with marketplace facilitator laws.
eBay collects and remits sales tax on applicable marketplace transactions, but sellers remain responsible for:
- Filing taxes for eBay sales when required
- Reporting marketplace sales correctly on state returns
- Paying any applicable income taxes or platform-related fees
eBay also recommends working with a tax professional, which is wise given how much reporting varies by state.
Does Walmart Collect and Remit Sales Tax for Sellers?
Under the Walmart Marketplace sales tax policy, Walmart collects and remits sales tax in states with marketplace facilitator laws once applicable thresholds are met.
Initially, sellers may be responsible for sales tax until Walmart confirms the transition. After that, Walmart remits sales tax for sellers in accordance with state laws.
As with other platforms, sellers still need to monitor non-marketplace sales and maintain strong records.
State-by-State Marketplace Facilitator Rules
Marketplace facilitator laws vary by state, especially when it comes to economic nexus thresholds. While most large marketplaces exceed these thresholds everywhere, understanding the details matters — particularly for reporting.
Here’s a snapshot of marketplace facilitator laws by state for several major states:
- California: $500,000 in marketplace sales during a 12-month period
- Texas: $500,000 in total Texas revenue
- New York: $500,000 in sales and more than 100 transactions in a calendar year
- Florida: $100,000 in taxable sales
- Washington: $100,000 in gross receipts
Notably, the only states without marketplace facilitator laws are Oregon, Montana, New Hampshire, and Delaware — though some states without a statewide sales tax, like Alaska, still have marketplace-specific rules.
Staying Compliant with Marketplace Facilitator Laws
Marketplace facilitator laws simplify sales tax — but they don’t eliminate responsibility. Sales tax compliance for marketplace sellers still requires attention, especially for businesses operating across multiple states or sales channels.
Here’s how sellers can stay compliant:
Maintain strong documentation
Keep detailed records of marketplace and non-marketplace sales, including where transactions occurred and how sales tax was handled. Good documentation makes audits far less stressful.
Use automation wisely
Sales tax automation tools can categorize transactions, apply correct rules, and integrate with POS and accounting systems. Automation improves accuracy and saves time — especially for multi-channel sellers.
Work with a tax professional
State-by-state rules, changing thresholds, and reporting requirements make sales tax complex. A tax professional can help assess nexus, determine filing obligations, and create a clear compliance plan.
No matter where or how you sell, The Sales Tax People are here to help. We simplify your sales tax, guide you through changing regulations, and give you confidence that your compliance is handled — so you can focus on growing your business.
Simplify your sales taxes. Protect your business. Partner with The Sales Tax People.
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