Marketplace Facilitator Sales Tax: What Sellers Owe (2026)

Marketplace facilitator sales tax rules make platforms like Amazon, Etsy, and eBay responsible for calculating, collecting, and remitting sales tax on orders placed through their sites. Every state with a statewide sales tax now has such a law. But the rules don't cover your own website, and you may still need to register.

This guide explains what the laws actually do, what they leave on your plate, and how to stay compliant when you sell in more than one place. It's general information, not legal advice, so confirm details with a tax professional or your state's revenue department.

What is a marketplace facilitator law?

A marketplace facilitator law shifts the duty to collect sales tax from the individual seller to the platform that hosts the sale and processes the payment. The platform becomes the "retailer" for tax purposes on those orders.

The change followed the 2018 U.S. Supreme Court decision in South Dakota v. Wayfair, which let states require out-of-state sellers to collect tax based on economic activity. South Dakota's own threshold, which many states copied, was $100,000 in sales or 200 transactions. States quickly realized that chasing millions of small sellers was impractical. Going after a few big platforms was easier. Washington moved first in 2018, and by 2020 nearly every sales-tax state had followed. You can read the background on Wikipedia's page on South Dakota v. Wayfair.

Most laws share three features:

• A sales threshold for the platform. The facilitator must collect once its sales into the state pass the state's economic nexus threshold, often $100,000 or 200 transactions. Some states, such as California and Texas, use $500,000 with no transaction count.
• Coverage of third-party sales. Orders from independent sellers on the platform count. Items the platform sells itself were always taxable.
• Relief for the seller. You generally don't owe tax on those orders, and you often don't report them as taxable sales.

Does Amazon collect sales tax for sellers?

Yes. Amazon calculates, collects, and remits sales tax on third-party orders in every state that has a sales tax and a marketplace facilitator law. You don't charge tax separately on those orders, and Amazon files for them.

Amazon FBA sales tax permit: do you need one?

It depends on the state. Under Amazon's seller tax guidance on Seller Central, some states require you to hold a sales tax permit even though Amazon collects on your behalf. Others don't. The reason is that permits also serve other purposes, such as buying inventory tax-free with a resale certificate. Our guide to the resale certificate for an online store covers that piece.

FBA adds a wrinkle: Amazon stores your inventory in warehouses across many states. That can create physical nexus in each one. Physical nexus is separate from the marketplace rules, and it can trigger registration if you sell anywhere else, such as on your own site.

A practical approach for FBA sellers:

1. Pull your Amazon inventory-placement report and list every state holding your stock.
2. Check each state's department of revenue site for whether marketplace-only sellers need a permit.
3. Register where it's required, even if you owe nothing on Amazon sales.
4. Note which states you'll need to register in anyway because of off-Amazon sales.

Etsy sales tax: seller responsibility and permits

Etsy collects and remits sales tax on orders shipped to states with marketplace facilitator laws. Your Etsy sales tax seller responsibility is mostly limited to those orders being handled. You still have obligations beyond them.

Do I need a sales tax permit to sell on Etsy?

Maybe. Many states don't require a permit for sales made only through a facilitator. Others want you registered anyway, especially if you're based there. Your home state is the one to check first, since you likely have nexus there by default. Etsy's sales tax help article notes that sellers remain responsible for knowing their local requirements.

Registration is usually free or cheap. Some states charge nothing, while others charge a modest fee. If you also sell at craft fairs or take direct orders, you'll almost certainly need one. For a wider look at when a permit is required, see Do I Need a Sales Tax Permit to Sell Online?

Selling on Etsy and your own website: sales tax

This is where sellers get caught. Etsy collects tax on Etsy orders only. Orders on your own Shopify, WooCommerce, or Rovela store are yours to handle. Facilitator laws don't follow you off the platform.

If you sell $40,000 on Etsy and $25,000 on your website, the Etsy figure doesn't hide you. States look at your own-site sales separately when judging thresholds, though how marketplace sales count toward economic nexus varies. Some states include them, others exclude them. Check the state economic nexus thresholds chart and the rules for the states you ship to.

Worked example: a ceramics seller across three channels

Imagine a seller based in Ohio who sells mugs on Etsy, stocks FBA inventory, and runs her own store. In a year she makes $60,000 on Etsy, $45,000 on Amazon, and $30,000 on her website, of which $12,000 ships to Texas and $9,000 to Washington.

• Etsy and Amazon orders ($105,000): the platforms collect and remit the tax. She charges nothing on these.
• Home state: Ohio treats her as having a presence, so she registers for a vendor's license and collects tax on website orders shipped to Ohio.
• Texas and Washington website sales: $12,000 and $9,000 are well under Texas's $500,000 and Washington's $100,000 thresholds, so own-site registration isn't triggered by those sales alone.
• FBA inventory: if Amazon moves her stock into Texas, Washington, or other states, that physical presence can require registration there regardless of website volume, so she checks the inventory report.

The lesson: the marketplace totals don't count against her website, but inventory location can still change the answer. This is an illustration with round numbers, not a ruling for any specific seller.

Marketplace facilitator laws by state: key differences

Every state with a statewide sales tax has adopted some form of facilitator law, but details differ. The main differences are the platform thresholds, whether marketplace sales count toward your own nexus, and whether you still need a permit.

The table below shows how several states handle the common questions. Rules change, so verify on each state's revenue site before acting.

State	Economic nexus threshold	Facilitator collects?	Marketplace sales and seller nexus	Permit practice for marketplace-only sellers
California	$500,000	Yes (since Oct. 2019)	Facilitator sales are generally not counted toward the seller's own threshold	Seller's permit generally needed if you have an in-state presence; the CDTFA lists exceptions
Texas	$500,000	Yes (since Oct. 2019)	Marketplace sales are generally excluded from the seller's count, per the Comptroller	Permit needed for direct sales or in-state business
New York	$500,000 and 100 transactions	Yes (since June 2019)	Marketplace sales are generally excluded from the seller's count	Registration commonly required for in-state sellers
Florida	$100,000	Yes (since July 2021)	Facilitator sales are generally excluded from the seller's count	Often required if you have a presence there
Washington	$100,000	Yes (since Jan. 2019)	Marketplace sales can count toward the seller's threshold	Business license generally required if you meet nexus or have a presence
Pennsylvania	$100,000	Yes (since April 2019)	Marketplace sales are included in the seller's count	License needed for direct sales or physical presence

Treat the table as a starting point, not a verdict. Thresholds and counting rules are summarized from each state's published guidance and change often. The Streamlined Sales Tax Governing Board at streamlinedsalestax.org and each state's department of revenue are the places to confirm.

What facilitators don't cover

• Income tax. Marketplace fees and facilitator rules have nothing to do with what you owe on profit. Federal and state income tax are still yours.
• Your own channels. Website, wholesale, pop-ups, and social sales fall outside the law.
• Exempt buyers. Resale and nonprofit exemption handling varies, so documentation still matters.
• Local taxes. Some home-rule states, like Colorado and Alabama, have local jurisdictions with their own quirks.

Multi-channel seller sales tax: a practical setup

If you sell on a marketplace and your own store, multi-channel seller sales tax compliance comes down to separating the two. The marketplace handles its orders. You handle everything else, and you need clean records to prove which is which.

Work through this order:

1. Tag every sale by channel. Export reports separately from Amazon, Etsy, and your store. Never blend them into one revenue number.
2. Map your nexus. List states where you have inventory, staff, or home office (physical) and states where own-site sales cross a threshold (economic). Our economic nexus guide for online sellers explains the trigger points.
3. Complete marketplace seller sales tax registration in each state where you have nexus, even if the marketplace covers some of the sales there.
4. Turn on tax collection in your own store only for those registered states.
5. File on schedule. Many states require a return even when you report zero taxable sales. Missing it can trigger penalties.
6. Keep marketplace tax reports. They support your zero or reduced reporting if you're audited.

What late or missed filings can cost

Penalties vary by state, but the pattern is similar. Late-filing and late-payment penalties commonly run from about 5% to 25% of the tax due, plus interest. A seller who collected $4,000 of tax from own-site customers and never remitted it could face a penalty of several hundred dollars or more on top of the tax, and collected-but-unremitted tax is treated more harshly than a simple underpayment. Because rates differ, check your state's penalty schedule.

Common mistakes to avoid

• Assuming the marketplace covers your website sales.
• Forgetting that FBA inventory creates physical nexus.
• Ignoring your home state because "Etsy handles it."
• Skipping zero-dollar returns.
• Waiting until you've crossed a threshold by a lot. Registering late can bring back-tax bills.

Our guides on collecting and filing sales tax for an online store and sales tax automation tools walk through the filing side. Dropshippers should also read about dropshipping sales tax nexus, since suppliers and storefronts complicate who owes what.

Should you sell on your own site as well?

Often, yes. Marketplaces take fees and own the customer relationship. A store of your own lets you keep the email list, margins, and branding. The tax side is manageable once you've mapped nexus. Our comparison of own website vs marketplace selling goes through the trade-offs in detail.

Before launching, decide how you'll collect tax. The cleanest option is a store that calculates tax at checkout by state and records it for reporting, so you aren't patching it together with add-ons.

Frequently asked questions

Do I still report marketplace sales on my sales tax return?

In many states you report them as exempt or marketplace-facilitated sales, even though you pay no tax on them. The reporting line varies by state, so check your return's instructions.

Does the marketplace pay tax on shipping or fees?

Facilitators collect on the taxable portion of the order as defined by the destination state. Whether shipping is taxable depends on that state's rules.

What if I only sell on Etsy and make little money?

You may still need a permit in your home state, and you owe income tax. Low volume doesn't remove those duties. It does make marketplace-only compliance simple.

Can I be audited even when Amazon collected the tax?

Yes. States audit sellers on nexus, permits, and own-channel sales. Your marketplace reports are your defense, so keep them for at least the period your state requires, typically three to four years.

Marketplace facilitator sales tax: keep it simple

The takeaway is straightforward. Marketplace facilitators collect tax on their own platform's orders. You remain responsible for permits where required, your own-site sales, nexus created by inventory or presence, and your records. Treat each channel as its own bucket and you'll avoid most surprises.

If you're ready to add a store you own beside your marketplace listings, Rovela builds a complete e-commerce store from a plain-language conversation, with Stripe checkout, an admin dashboard, and the features you'd otherwise buy as add-ons included in one flat subscription. See Rovela's pricing or start at rovela.ai.