The number of states looking to hold marketplace facilitators responsible for collecting and remitting sales tax on behalf of all marketplace sellers is steadily increasing. More than 20 states currently have marketplace facilitator measures under consideration, including the four most populous states in the country: California, Florida, New York and Texas.
If you’re a marketplace facilitator or seller and any of these proposed changes become law, your collection and/or reporting requirements will likely be affected.
Marketplace facilitator sales tax proposals have been introduced in the following states, listed with the proposed effective date. If an economic nexus component is included, the collection requirement includes an exception for small facilitators/sellers. If there’s no component, the collection requirement would apply to all marketplace facilitators making sales in the state. Click on the links for more details:
Arizona (the first day of the month following the effective date of the act)
Includes an economic nexus component
Arkansas (the first day of the calendar quarter following the effective date of the act)
The exact requirements for marketplace facilitators and their third-party sellers differ from state to state. For example, some require sellers to report their marketplace sales and take a deduction for them if the facilitator is responsible for collecting sales tax; others don’t. However, all states require sellers to register with the tax department and collect and remit tax on sales made through other channels, such as their own e-commerce store or a non-collecting marketplace.
Gail Cole is a Senior Writer at Avalara. She’s on a mission to uncover unusual tax facts and make complex laws and legislation more digestible for accounting and business professionals — or anyone interested in learning about tax compliance.