Key takeaways
- Marketplaces collect sales tax – Platforms like Amazon and eBay handle tax collection, but sellers still have compliance responsibilities.
- Tax nexus still applies – Sellers may need to register and file tax returns if they have economic or physical nexus in certain states.
- Multi-channel sales require tracking – Sellers must manage tax collection for sales made outside of marketplaces, such as through their own website.
In short: Marketplace facilitator laws are U.S. state laws that make online marketplaces like Amazon, eBay, Walmart, and Etsy collect and remit sales tax for third-party sellers. Sellers no longer collect tax on those marketplace sales. But they must still handle sales tax on their own website and other channels and watch for nexus, such as stored inventory.
Update (October 2026): The core rule is unchanged: marketplaces collect sales tax on marketplace sales in every state with a statewide sales tax. What has changed is how some states measure nexus. Illinois removed its 200-transaction test for remote retailers and marketplace facilitators on 1 January 2026. Kentucky did the same on 1 August 2026, and Utah dropped its test for remote sellers on 1 July 2025. State registration rules for marketplace sellers are summarised below.
E-commerce has grown at a record pace over the past decade, and tax authorities are watching it more closely. One of the biggest rule changes is marketplace facilitator laws. These laws move the duty to collect sales tax from individual sellers to online marketplaces.
For many sellers, these laws make tax compliance simpler. But they also raise new questions about tax duties, nexus, and selling on several channels. This guide explains marketplace facilitator laws, how they affect sellers, and what steps businesses should take to stay compliant.
What are marketplace facilitator laws?
Marketplace facilitator laws are state rules that require online marketplaces, such as Amazon, eBay, Walmart, and Etsy, to collect and remit sales tax for third-party sellers. These laws make sure state and local governments receive the right sales tax from e-commerce sales. They also reduce the burden on individual sellers.
Why were marketplace facilitator laws introduced?
Marketplace facilitator laws were introduced because states were losing sales tax revenue as e-commerce grew. In the past, US sales tax collection depended on whether a seller had a physical presence in a state. Small businesses selling online could often avoid collecting sales tax in states where they had no offices, warehouses, or employees. As e-commerce expanded, states lost a lot of tax revenue, which led to new laws.
A turning point came with the 2018 South Dakota v. Wayfair Supreme Court ruling. It allowed states to impose sales tax duties based on economic nexus rather than just physical presence. This ruling led to a wave of new tax laws, including marketplace facilitator laws, to ensure compliance across online sales platforms.
How do marketplace facilitator laws work?
Under marketplace facilitator laws, the marketplace is treated as the “retailer” for tax purposes. This means that:
- The marketplace platform, not the seller, collects sales tax from customers at checkout.
- The marketplace remits the collected tax directly to the correct state tax authorities.
- The seller no longer needs to collect or remit sales tax for marketplace sales in states with these laws.
Today, every US state with a statewide sales tax has marketplace facilitator laws. Similar rules exist in Canada, the EU, Australia, and elsewhere.
How do marketplace facilitator laws impact online sellers?
Marketplace facilitator laws free sellers from collecting tax on marketplace sales, but they also bring new compliance points to consider.
Sales tax collection is automated—but not for all sales
For sales made through a marketplace, the platform handles sales tax collection. However, many sellers also sell through their own website, a physical store, or other non-marketplace channels. These sellers must still collect and remit sales tax where required. Related reading: Marketplace Facilitator vs. Direct Seller: Splitting Tax Responsibility.
Example: A business selling handmade jewelry sells on both Etsy and Shopify. Etsy collects and remits sales tax for marketplace orders. The seller must manage tax compliance for Shopify sales on their own.
Sellers must still monitor tax nexus
Even though marketplaces handle tax collection, sellers may still have economic or physical nexus in some states. Factors that can create nexus include:
- Storing inventory in warehouses (e.g., Amazon FBA fulfillment centers)
- Having employees, contractors, or offices in a state
- Reaching a certain revenue threshold from direct sales in a state
If a seller has nexus because of these factors, they may need to register and file sales tax returns. This applies even if their marketplace sales tax is already handled.
Example: A seller using Amazon FBA has inventory stored in several states. Amazon collects and remits sales tax. Still, the seller might need to file tax returns in those states, because stored inventory creates nexus.
State-by-state variations in marketplace laws
Not all states have the same marketplace facilitator rules. Some states add extra rules, such as requiring sellers to report sales or include marketplace tax on their tax filings.
Example: In some states, sellers must still file a zero-dollar tax return if a marketplace collected all the sales tax. In others, no filing is needed.
International sellers must pay attention
If you’re an international seller using US marketplaces, you might assume you don’t need to worry about US sales tax. However, you may have economic nexus (from sales volume) or physical presence (e.g., using Amazon fulfillment centers). If so, you may still need to register and file tax returns in some states.
Do marketplace sellers still need to register for sales tax?
Often not, if every sale in a state goes through a marketplace that collects the tax. You still need to register if you also sell directly and pass that state's threshold, or if you have physical presence there. A few states, such as Washington, expect marketplace sellers to register once total receipts pass the threshold, even with no direct sales.
Here is how five states handle it, according to their revenue departments (checked October 2026):
- Texas: A remote seller that sells only through a marketplace provider certifying it will collect the tax does not need a Texas permit. It must keep records of marketplace sales for four years. Texas-based sellers need a permit. Source: Texas Comptroller.
- California: You do not need a seller's permit if all your retail sales are facilitated by a marketplace facilitator. Source: CDTFA.
- Washington: Remote marketplace sellers with more than $100,000 in combined gross receipts must register. They report marketplace and direct sales under Retailing B&O tax, then deduct facilitated sales from retail sales tax. Source: Washington DOR.
- Florida: Marketplace providers have collected tax since 1 July 2021. A remote seller with more than $100,000 of taxable remote sales in the previous calendar year must register and collect on sales made outside the marketplace. Source: Florida DOR, TIP 21A01-03.
- Missouri: You do not have to register if you sell only through a marketplace facilitator. If you also sell directly, count your marketplace sales too. Once total taxable Missouri sales exceed $100,000 over 12 months, register and remit tax on your direct sales. Source: Missouri DOR.
Do marketplace sales count toward your own threshold?
It depends on the state. California, Texas and Missouri include marketplace sales when you test your own threshold. Texas, for example, counts them toward its $500,000 safe harbour. Other states count only your direct sales. This means a seller with modest website sales can still cross a threshold because of marketplace volume. Our economic nexus by state guide lists the rule for each state.
Which nexus thresholds changed in 2025 and 2026?
Several states have dropped the 200-transaction test and now use a sales-value threshold only. This matters most for sellers with many small direct orders.
- 1 July 2025, Utah: the 200-transaction test no longer applies to remote sellers. The $100,000 gross revenue test remains. Source: Utah State Tax Commission.
- 1 January 2026, Illinois: the 200-transaction threshold was removed for remote retailers and marketplace facilitators. Only the $100,000 gross receipts test remains, checked on a rolling quarterly basis from April 2026. Source: Illinois Department of Revenue, Bulletin FY 2026-12.
- 1 August 2026, Kentucky: House Bill 757 removed the 200-transaction standard for remote retailers and marketplace providers. Source: Kentucky Department of Revenue.
How can online sellers ensure compliance?
Online sellers can stay compliant by checking nexus, reviewing marketplace tax reports, tracking each sales channel, and using automation. Taking these steps early helps you avoid tax pitfalls.
How to check whether you need to register in a state
- List every state where you have staff, offices or stored stock, including marketplace fulfilment centres.
- Total your sales into each state over the period that state uses, and check whether it counts marketplace sales.
- Compare the total with the state's threshold, such as $100,000 in Illinois or $500,000 in California and Texas.
- Confirm the marketplace collects in that state, and keep its tax reports and any certification it issues.
- If you have nexus, register, collect tax on direct sales and file returns on the schedule the state assigns.
Understand your nexus obligations
Even when marketplaces collect tax, sellers should check whether they have physical or economic nexus in any state where they operate. If they do, they may still need to register for sales tax permits and file tax returns. You can also read Sales Tax Nexus Management for Shopify and Marketplace Sellers.
Review marketplace tax reports
Marketplaces provide tax reports that show the sales tax collected and remitted for sellers. Review these reports regularly for accuracy, and keep records for tax reporting and audits.
Track multi-channel sales separately
If you sell on several platforms (e.g., Amazon, Shopify, and eBay), make sure you collect and remit tax correctly for non-marketplace sales. Using tax automation software can help simplify compliance.
Consider sales tax automation solutions
Managing tax compliance by hand can take a lot of time, especially if you sell in many states. Solutions like Taxually help automate sales tax calculations, reporting, and filing. This helps businesses stay compliant as tax rules change. We cover this in more detail in When Sales Tax Automation Breaks Down Across Marketplaces.
Stay updated on changing tax laws
Tax laws keep changing, and new rules can affect online sellers. Keep up with new laws at the state and federal levels to avoid unexpected tax bills.
Conclusion
Marketplace facilitator laws have changed how online sellers handle sales tax. They make compliance easier in some ways but more complex in others. These laws free sellers from collecting tax on marketplace sales. But sellers must still manage multi-channel compliance, tax nexus, and state differences.
By staying informed and using automation tools, sellers can focus on growing their businesses without managing tax compliance by hand.
Do you need help with your sales tax compliance? Book a free call with one of our sales tax experts to find bespoke solutions for your business, optimize your tax costs, and reach millions of new potential customers.
How Taxually handles this
Taxually’s LumaTax runs a nexus analysis on your sales, helps you register in the states where you must collect, and prepares and files multi-state sales tax returns, including Canadian GST/HST. LumaTax is currently available to enterprises and accounting firms. For the full workflow, read how to automate US sales tax filing in every state.
Related guides
Frequently asked questions
Do marketplace facilitator laws apply to all online marketplaces?
Most major marketplaces, like Amazon, eBay, Walmart, and Etsy, are covered, but requirements can vary by state.
Do I still need a sales tax permit if the marketplace collects tax for me?
If you sell only on marketplaces, you may not need a permit in certain states. However, if you also sell through your website or other channels, you may need to register and file tax returns.
How do I know if I have economic or physical nexus in a state?
You may have nexus if you exceed a state’s sales threshold, store inventory in fulfillment centers, or have employees or offices in that state.
What happens if I sell on multiple platforms?
Marketplaces collect and remit sales tax for their transactions, but you are responsible for collecting and remitting tax for direct sales through your own website or other non-marketplace channels.
Do international sellers need to worry about US sales tax?
Yes, if they meet economic nexus thresholds or store inventory in US fulfillment centers, they may need to register and file tax returns in certain states.
Do marketplace sales count toward my economic nexus threshold?
It depends on the state. California, Texas and Missouri include marketplace sales when you test your own threshold, while other states count only direct sales. Check the rule in each state where you sell.
Did any states change their nexus thresholds in 2025 or 2026?
Yes. Utah dropped its 200-transaction test on 1 July 2025, Illinois on 1 January 2026 and Kentucky on 1 August 2026. Sales-value thresholds still apply in each state.
