Who Collects and Remits Sales Tax When You Sell through a Marketplace Platform?

Every U.S. state with a sales tax now has a marketplace facilitator law. Most have had them for several years. Yet many sellers and platforms still misunderstand exactly where their responsibilities begin and end, especially in mixed-channel scenarios. The South Carolina Supreme Court’s March 2026 ruling against Amazon, which we get to shortly, is a current reminder that states are still working through edge cases, even on transactions that happened a decade ago.

This is a plain-language guide to who collects sales tax, who files, and where the practical gaps still are.

Key takeaways: marketplace facilitator sales tax

• Every state with a sales tax has a marketplace facilitator law, but thresholds, definitions, and seller obligations vary widely.
• When you sell a product or service through a marketplace platform and that marketplace facilitator collects on your behalf, you typically still owe sales tax on direct (non-marketplace) sales and may need to maintain registrations.
• Inventory programs like Fulfillment by Amazon can create physical nexus in states the seller never chose.
• A March 2026 South Carolina Supreme Court ruling shows that historical questions about marketplace responsibility are still being litigated.

What a marketplace facilitator is, and isn’t

A marketplace facilitator is a business that lists third-party sellers’ products on a platform, processes payments, and connects buyers with those sellers. The familiar examples are Amazon, Etsy, eBay, and Walmart Marketplace.

A hosted store provider isn’t the same thing. Shopify, WooCommerce, and Wix give sellers tools to run their own stores; they don’t broker the transaction in the way a marketplace facilitator does. The marketplace facilitator definition matters because the legal collection obligation only attaches to entities that meet it.

The line gets blurry in some cases. Payment processors, drop-shippers, and certain SaaS-driven storefront platforms can fall in between. State definitions vary, and some are broader than others. We’ve covered the foundational questions in our marketplace facilitator overview.

Who is responsible for what when a marketplace is involved

Once a marketplace facilitator hits a state’s collection threshold, the platform is responsible for collecting, remitting, and reporting sales tax on the transactions it facilitates into that state. The seller’s compliance burden shifts but doesn’t disappear.

For sellers, the practical reality is more nuanced than “the platform handles it.” If you have nexus in a state from sources other than the marketplace (your own website, a physical location, employees, or inventory in a fulfillment center), you may still need a current sales tax permit and may be required to file periodic returns even if you owe no tax for a given period. You owe sales tax on direct sales outside the marketplace: your own ecommerce site, trade shows, B2B direct relationships. Documentation matters; if a state audits you, separating marketplace-facilitated sales from direct sales is your responsibility, not the marketplace’s.

For the platform itself, the obligations are heavy but well-defined. Some states allow contractual reallocation of collection responsibility between the platform and large sellers, with thresholds varying by state, while others (Iowa, for example) explicitly prohibit it. Home rule cities and special districts can layer additional collection obligations on top of state rules. Some states impose customer notification or reporting requirements as alternatives.

We’ve worked through these distinctions in our piece on the most pressing marketplace facilitator questions.

Marketplace nexus and where the gaps still are

The headline rules are clear enough, but as the Tax Foundation has noted, the state-by-state patchwork creates real complexity. These are the issues we see most often.

The mixed-channel seller. A SaaS or product company that sells through both Amazon and its own website often handles the Amazon side correctly and the direct side incorrectly. The platform’s collection covers Amazon transactions, but direct sales create their own nexus and require their own registrations and filings. Selling on Amazon and assuming sales tax is fully covered is one of the most common errors we encounter.

FBA-driven physical nexus. A seller using Fulfillment by Amazon may have inventory stored in warehouses in states they didn’t select. That can create physical nexus separate from the marketplace question. Amazon collects sales tax on FBA sales because the marketplace facilitator law obligates it to. But the seller’s own nexus footprint, for direct sales into those same states, can still trigger registration and filing requirements.

Home rule and special-district rules. Marketplaces collect state-administered sales tax. They often don’t collect city-level taxes like Chicago’s PPLTT, certain Colorado home rule rates, or some Alabama local variations. If you sell into those jurisdictions, the gap is yours.

Digital products and SaaS through marketplaces. Some state facilitator laws explicitly cover digital goods and SaaS; others were written for tangible personal property and never updated. If you sell digital products through a marketplace, don’t assume the platform has handled it.

Older periods. The Amazon-South Carolina case is a current illustration. On March 18, 2026, the South Carolina Supreme Court ruled 3-2 that Amazon was liable for $12.5 million in uncollected sales taxes for the first quarter of 2016, before the state’s marketplace facilitator law took effect in 2019. The court found that Amazon’s level of control over third-party transactions made it engaged in the business of selling under the existing 2011 statute. The practical takeaway is that historical periods can still come back into scope when a state sees uncollected revenue and existing statute language it can use. According to the South Carolina Department of Revenue, the ruling’s implications could pull in further amounts across pending cases.

The only U.S. states without a state-level sales tax are Oregon, Montana, New Hampshire, Alaska, and Delaware. Alaska is a partial exception: there is no state sales tax, but many municipalities collect through a centralized arrangement (ARSSTC) that does include marketplace rules. Everywhere else, a marketplace facilitator law is in force.

Practical guidance: don’t assume the platform handles everything

For sellers: run a current nexus check that separates marketplace from direct sales and captures FBA inventory locations. Confirm permits and filings in every state where you have nexus, regardless of whether sales there were marketplace-facilitated. Keep clean documentation of which sales fell under each category, because audit defense requires it.

For platforms: confirm registration and threshold tracking in every taxable state plus relevant home rule cities. Document your sourcing logic, especially for digital products and SaaS where state rules are still inconsistent.

For both, when in doubt, get a review. We covered the broader compliance picture in our overview of states’ online sales tax and marketplace facilitator rules, and our sales tax compliance services cover the work end-to-end.

Marketplace facilitator laws were supposed to simplify sales tax, and for the most part they have. But the gaps are real, and the Amazon-South Carolina ruling is a reminder that states are still testing the boundaries.

Ready to map your obligations under marketplace facilitator laws?

If you’re a seller or a platform trying to understand your specific exposure under marketplace facilitator laws, we’d welcome a conversation. Contact Miles Consulting Group at info@milesconsultinggroup.com or book a consultation through our website.

Frequently asked questions

What is a marketplace facilitator?

A marketplace facilitator is a business that lists third-party sellers’ products on a platform, processes payments, and connects buyers with sellers. Amazon, Etsy, eBay, and Walmart Marketplace are common examples. State definitions vary, and the line between a marketplace facilitator and other commerce platforms (like hosted store providers) is sometimes blurry.

Do I still need to file sales tax returns if Amazon collects on my behalf?

Often, yes. If you have nexus in a state from sources other than the marketplace, such as your own ecommerce site, a physical location, employees, or FBA inventory, you typically need to maintain your sales tax permit and file returns. In many states, that includes filing zero returns or non-collecting reports for periods when all your sales in the state ran through the marketplace.

Does Fulfillment by Amazon create sales tax nexus in additional states?

Inventory stored in Amazon’s fulfillment centers can create physical nexus in those states, separate from any economic nexus the marketplace itself has triggered. Amazon collects sales tax on the marketplace transactions, but your separate nexus from inventory can affect direct sales and registration obligations. FBA sellers should map their inventory locations and review their filing obligations regularly.

Are digital products and SaaS covered by marketplace facilitator laws?

It depends on the state. Some marketplace facilitator laws explicitly cover digital goods and SaaS; others were written for tangible personal property and haven’t been updated. If you sell digital products through a marketplace, check the specific rules in each state where you have customers rather than assuming the platform has handled it.

Which states don’t have marketplace facilitator laws?

Oregon, Montana, New Hampshire, Alaska, and Delaware don’t have a state-level sales tax, so there is no state marketplace facilitator law to comply with. Alaska’s municipalities collect sales tax through a centralized arrangement (ARSSTC), and that does include marketplace rules. Every other U.S. state has a marketplace facilitator law in force.