Huge Sales Tax Questions Every Marketplace Facilitator Should Consider

A marketplace facilitator (or “MPF”) is a business or organization that contracts with third parties (“sellers”) to sell goods or services on its platform, facilitating the sales that arise (such as Amazon or Etsy).  As the name seems to indicate, these companies facilitate sales of goods or services between a seller and a buyer – but generally the MPF does not take title to or even carry the inventory.  Following the 2018 South Dakota vs. Wayfair U.S. Supreme Court decision eliminating the physical presence standard for sales tax nexus, most states have in the last 4 years started requiring the marketplace facilitators to collect and remit the sales tax on behalf of the third party sellers. This places a burden on MPFs to be the company which collects and remits and reports the sales tax to the various states in which they’ve established nexus.

However, not all marketplace facilitators are as large as Amazon or Etsy, and in their haste to pass laws to incorporate filing requirements on marketplace facilitators, many states didn’t give much consideration to businesses that might be outside the “norm” of simply facilitating the sale of tangible property on the marketplace.

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