States enacting marketplace facilitator nexus rules

    In the year since the U.S. Supreme Court rendered the South Dakota v. Wayfair, Inc., decision, most states have enacted economic nexus thresholds that require remote sellers without the traditional physical presence in a state to register and begin collecting and remitting sales and use tax. Wayfair basically expands the nexus rules. In addition to states enacting legislation to address remote and internet sellers, they have increasingly enacted legislation for sales by marketplace facilitators such as Amazon and Etsy.

    In states that have enacted marketplace facilitator nexus rules, businesses that provide an e-commerce infrastructure, customer service, payment processing services, and marketing likely meet the definition of a marketplace facilitator. That means they may now be required to register, collect, and remit the tax on those goods being sold by remote sellers on the marketplace platform. 

    Currently 37 states have enacted nexus rules requiring marketplace facilitators to register, collect, and remit sales and use tax as of effective dates, which are listed in the following chart.


    Enforcement date


    Aug. 17, 2017

    Rhode Island (register or comply with notice reporting requirements); mandatory registration- effective 7/1/2019)

    Jan. 1, 2018


    April 1, 2018

    Oklahoma, Pennsylvania (new threshold and enforcement date, 7/1/2019)

    Oct. 1, 2018

    Minnesota (new threshold, 10/1/2019)

    Nov. 1, 2018

    New Jersey, South Carolina

    Dec. 1, 2018


    Jan. 1, 2019

    Alabama, Iowa

    March 1, 2019

    South Dakota

    April 1, 2019

    District of Columbia, Nebraska

    June 1, 2019

    Idaho, New York, Vermont

    July 1, 2019

    Arkansas, Indiana, Kentucky, New Mexico, Rhode Island, Virginia, West Virginia, Wyoming

    Sept. 1, 2019


    Oct. 1, 2019

    Arizona, California, Colorado, Maine, Maryland, Massachusetts, Nevada, North Dakota, Texas, Utah, Wisconsin

    Jan. 1, 2020

    Hawaii, Illinois


    Remote sellers, on the other hand, may be required to count these marketplace sales as part of their overall gross sales when determining whether they are meeting the economic nexus thresholds in each state. At least 18 states plus the District of Columbia currently require a remote seller to include the marketplace facilitator sales as part of the count. They are Alabama, California, Connecticut, District of Columbia, Idaho, Kentucky, Minnesota, Nebraska, New Jersey, New York, Oklahoma, Pennsylvania, South Carolina, South Dakota, Texas, Vermont, Washington, West Virginia, and Wisconsin.

    As marketplace facilitator legislation becomes enforceable, many remote sellers are questioning how to report their own sales and marketplace facilitator sales on their monthly, quarterly, and annual sales and use tax return – ultimately, who is responsible for collecting and remitting the sales tax. Although the state considers marketplace facilitators to be making the sale, the revenue from the sale, after fees and commissions, belongs to the remote seller. States have differing rules regarding how these sales should be reported, as the following examples show. 

    - In Connecticut, a remote seller who is already registered with the state must report gross receipts from all sales in the state, then deduct any sales made through the marketplace facilitator.

    - Alabama, Pennsylvania, South Carolina, South Dakota, and Washington are requiring their remote sellers to report all sales, then deduct any sales made through the marketplace. Deductions may be reported as nontaxable sales, such as a sale for resale or simply as a deduction. 

    - Iowa is taking the approach that a remote seller making sales solely through a marketplace is not required to register or report its sales with the state if the marketplace facilitator reports the sales on its behalf.

    - New York is requiring the marketplace facilitator to provide the remote seller with Form ST-150 – Marketplace Provider Certificate of Collection. Upon receipt of this form from a marketplace facilitator, the remote seller is relieved from liability for the collection of sales tax and should not include the receipts from the sale as part of their taxable receipts. The form certifies to the remote seller that the marketplace facilitator is registered to collect sales tax and will collect and remit sale tax on the sales it facilitates. Having the following statement on a publicly available agreement will have the same effect as the issuance of Form ST-150:

    [Marketplace facilitator name] is a registered New York State sales vendor and will collect sales tax on all taxable sales of tangible personal property that it facilitates for delivery to a New York State address.

    As more states enact marketplace facilitator rules and the rules become enforceable, the states will likely provide a stream of additional guidance regarding the collection, remittance, and reporting of sales and use tax for sales made through a marketplace facilitator.

    The information in this document is meant to assist businesses as they review their current state requirements and take steps to become compliant. While New York’s process may appear to be straightforward, other states may require further clarification. 

    Stay tuned.


    Scott Smith, Director, State and Local Tax Services


    Wendy Zee Galex, Manager, State and Local Tax Services


    Subject matter expertise

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      Scott Smith

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