If you sell on Amazon, Walmart, eBay, or Etsy, the marketplace itself is now legally responsible for collecting and remitting sales tax in nearly every US state — but that does not mean you, the seller, are off the hook. Marketplace facilitator (MF) laws shift the collection obligation to the platform, yet your registration, filing, and direct-channel nexus obligations often remain. This guide walks through how MF nexus interacts with economic and physical nexus, when you still need to register, and how to handle the gnarly edge cases — home-rule cities, gross receipts taxes, hybrid Shopify-plus-Amazon scenarios, and threshold-inclusion traps — on a state-by-state basis, verified against primary state Department of Revenue (DOR) sources.
What Is Marketplace Facilitator Nexus?
Marketplace facilitator nexus is the legal mechanism that requires online platforms — not their third-party sellers — to collect and remit sales tax on facilitated transactions. It is a creature of post-Wayfair state legislation, enacted between 2018 and 2023, that consolidates collection at the platform level rather than chasing thousands of individual remote sellers.
Definition under post-Wayfair law
The constitutional foundation is South Dakota v. Wayfair, Inc., 138 S. Ct. 2080 (2018), which overruled the physical-presence rule of Quill Corp. v. North Dakota and held that states may require remote sellers — and, by extension, marketplace platforms — to collect sales tax based on economic activity alone. Following Wayfair, every state with a sales tax has enacted both an economic nexus statute and a marketplace facilitator statute.
A “marketplace facilitator” is generally defined as a person who:
- Contracts with third-party sellers to list or advertise tangible personal property, services, or digital goods on a marketplace, and
- Collects payment from the purchaser and transmits it (less any commission) to the seller.
This definition, derived from the Multistate Tax Commission’s (MTC) model statute, captures Amazon, Walmart Marketplace, eBay, Etsy, Mercari, Poshmark, Wayfair, and similar platforms. It generally does not capture pure payment processors (Stripe, PayPal) or pure advertising platforms (Google Shopping ads where the merchant transacts on its own site).
Marketplace facilitator vs. marketplace seller vs. remote seller
Three distinct roles, each with different obligations:
| Role | Definition | Primary Obligation |
|---|---|---|
| Marketplace facilitator | The platform (Amazon, Etsy, Walmart) | Collect, remit, and report tax on all facilitated sales |
| Marketplace seller | A third-party seller selling through a facilitator | Generally relieved of collection on facilitated sales; may still need to register |
| Remote seller | A seller selling directly to in-state customers without physical presence (e.g., via own Shopify store) | Collect and remit if economic nexus thresholds are met |
A single business can be all three at once. A Shopify-plus-Amazon seller is a remote seller for the Shopify channel and a marketplace seller for the Amazon channel, while Amazon is the marketplace facilitator.
Why MF laws were enacted
States lobbied for MF laws because chasing individual remote sellers is administratively expensive, and consolidating collection at the platform level is dramatically more efficient: one Amazon registration captures hundreds of thousands of underlying sellers. As of 2026, every US state with a general sales tax has enacted an MF statute, with Missouri being the last to do so effective January 1, 2023. The five states without a general statewide sales tax — Alaska, Delaware, Montana, New Hampshire, and Oregon — do not have MF statutes at the state level, although Alaska has a unique borough/municipal-level regime via the Alaska Remote Seller Sales Tax Commission.
How Marketplace Facilitator Laws Affect Your Nexus Footprint
The key principle: MF laws shift the collection responsibility to the platform, but they do not always shift the nexus footprint itself. You can still owe filings, registrations, and other taxes (B&O, GET, GRT) even when the platform handles the sales tax.
When the marketplace collects on your behalf
When Amazon, eBay, or Walmart is registered as a marketplace facilitator in a state, the platform — not you — is the legal “retailer” for sales tax purposes on facilitated transactions. The platform calculates, collects, and remits the tax. The seller’s obligation on those specific transactions is generally satisfied.
But “generally satisfied” is the operative phrase. Several scenarios still create seller-level obligations:
- You have independent physical presence in the state (e.g., FBA inventory, an office, employees). Most states require the seller to register based on physical presence even when 100% of sales are marketplace-facilitated.
- You make direct-channel sales in the state through your own Shopify, BigCommerce, or WooCommerce site. Those sales are not marketplace-facilitated and trigger their own collection obligation.
- The state has a non-sales tax (B&O, GET, GRT, CAT) that the MF law does not displace.
When you still owe tax on direct-channel sales
If you sell through both Amazon and Shopify into California, where the economic nexus threshold is $500,000 in total combined sales of tangible personal property delivered into the state under R&TC §6203(c)(4), your direct-channel sales must independently be evaluated for economic nexus. The marketplace’s collection on Amazon sales does not exempt your Shopify sales from your own collection obligation.
Practical example: a seller does $300,000 on Amazon and $250,000 on Shopify into California. Amazon collects on the $300,000. The seller owes collection on the $250,000 Shopify channel — and must register with the California Department of Tax and Fee Administration (CDTFA) for a Seller’s Permit to do so.
Do marketplace sales count toward your economic nexus threshold?
This is the single most misunderstood question in MF compliance. The answer varies by state and is a major audit trap.
States generally fall into three camps:
- Include marketplace sales in the seller’s threshold test (gross approach): California aggregates all sales — direct and marketplace — when measuring whether the seller has crossed the $500,000 threshold, per R&TC §6203(c)(4), which references “total combined sales … and all related persons”.
- Exclude marketplace sales from the seller’s threshold test: Some states explicitly carve out marketplace-facilitated sales when measuring the seller’s own remote-seller threshold.
- Silent or fact-dependent: Many states have not issued clear guidance, and the answer turns on how the DOR has interpreted the statute.
If you operate a hybrid direct-plus-marketplace business and the threshold-inclusion question matters to you, contact us for a current review — this is one of the areas where state DOR positions have shifted multiple times since 2019.
Marketplace Facilitator Nexus by State: 50-State Matrix
The matrix below summarizes — for the states covered by our Tier-1 verified knowledge base — the MF effective date, statute citation, and economic nexus threshold. For states not in our Tier-1 KB, we keep entries general and flag the need to verify against the live state DOR page.
Reading the matrix
- MF effective date: the date the state’s marketplace facilitator collection requirement first took effect.
- Economic threshold: the dollar (and, where applicable, transaction) threshold above which a remote seller — and a marketplace facilitator — must register and collect.
- Threshold inclusion: whether marketplace-facilitated sales count toward the seller’s threshold for the seller’s own registration (varies; consult state guidance).
Tier-1 verified states
| State | MF Effective Date | Economic Threshold | Statute |
|---|---|---|---|
| Alabama | January 1, 2019 | Alabama applies different sales-volume thresholds depending on the tax type and program (for example, the Simplified Sellers Use Tax program for remote sellers versus other nexus tests), and the right number depends on your facts. If you sell into Alabama and are evaluating registration, contact us for a current review. | Ala. Code §40-23-1 et seq. |
| Arizona | Marketplace facilitator collection obligations took effect on a state-specific date that should be confirmed against current Department of Revenue guidance. If you operate or sell through a marketplace, contact us for a current review. | $100,000 in Arizona sales | Arizona’s transaction privilege tax is governed by provisions in Title 42 of the Arizona Revised Statutes, with the specific section turning on the activity classification. If you need the controlling citation for an Arizona TPT issue, contact us for a current review. |
| California | October 1, 2019 (AB 147) | $500,000 in total combined sales of tangible personal property delivered into California | California’s use tax collection obligations for remote sellers are codified in the Revenue & Taxation Code, with the specific sections depending on the seller type and tax period. If you need the controlling California citation, contact us for a current review. |
| Colorado | Colorado’s marketplace facilitator and destination-sourcing rules took effect in stages, with subsequent legislative changes adjusting scope and timing. If you sell into Colorado and need to confirm the applicable effective date for your fact pattern, contact us for a current review. | Colorado uses an economic nexus threshold based on retail sales into the state over a defined lookback period. If you are approaching or have crossed the threshold, contact us for a current review. | Colorado sales and use tax is codified in Title 39 of the Colorado Revised Statutes, with the controlling section depending on the issue. If you need the specific citation, contact us for a current review. |
| Florida | July 1, 2021 (SB 50) | $100,000 in retail sales delivered into Florida (no transaction count) | Fla. Stat. §212.05965 |
| Hawaii | Adopted via Act 41 (2020); GET regime | Hawaii’s economic nexus thresholds for general excise tax purposes are based on sales into the state or transaction count, per published guidance from the Hawaii Department of Taxation and secondary MTC sources; see the Hawaii DOT. The $100,000 figure published on tax.hawaii.gov in some contexts refers to mandatory EFT, not nexus. | Hawaii’s General Excise Tax is codified in the Hawaii Revised Statutes, with the controlling section depending on the activity. If you need the specific citation for a GET question, contact us for a current review. |
| Illinois | The Leveling the Playing Field for Illinois Retail Act took effect January 1, 2021; see the Illinois DOR remote retailer guidance. | Effective January 1, 2026, Illinois’s economic nexus threshold is $100,000 or more in cumulative gross receipts from sales of tangible personal property to Illinois purchasers during the 12-month lookback period; the 200-transaction prong is eliminated (see Illinois DOR). | Illinois Retailers’ Occupation Tax and Use Tax are codified in 35 ILCS, with the controlling section depending on the issue. If you need the specific citation for an Illinois sales tax matter, contact us for a current review. |
| Kansas | July 1, 2021 (SB 50) | Some states use a gross-receipts-only economic nexus threshold without a transaction count, but the dollar amount and lookback vary. If you need to confirm the threshold for a specific state, contact us for a current review. | K.S.A. §79-3601 et seq. |
For states not in the Tier-1 KB above (most other US states), MF laws have generally been in place since 2019 or 2020, and the typical economic nexus threshold is $100,000 or 200 transactions — but the specific effective date, statute citation, threshold-inclusion rule, and marketplace-only-seller registration treatment vary. Before relying on any specific number, contact us for a current review against the live state DOR page.
States without a statewide sales tax
Five states have no general statewide sales tax and therefore no statewide MF law:
- Alaska: No statewide sales tax. However, the Alaska Remote Seller Sales Tax Commission (ARSSTC) administers a Uniform Code adopted by participating boroughs and municipalities, with a $100,000 in sales threshold (the 200-transaction threshold was eliminated effective January 1, 2025). Marketplace facilitators are required to collect on facilitated sales delivered into participating jurisdictions.
- Delaware: No sales tax; no MF law.
- Montana: No general sales tax; resort-area local taxes only.
- New Hampshire: No sales tax.
- Oregon: No sales tax. Note: Oregon’s Corporate Activity Tax (CAT) is a separate regime that applies to certain large sellers regardless of MF status.
State-by-State Deep Dives (High-Volume States)
This section drills into the 10 highest-volume states for marketplace sellers, with a focus on the rules that most often trip up hybrid direct-plus-marketplace sellers. Where our Tier-1 KB covers the state, we use it as the source of truth; where it does not, we keep claims general.
California
Bottom line: if you have FBA inventory in California, you must register for a CDTFA Seller’s Permit even if 100% of your sales are facilitated by Amazon.
California’s marketplace facilitator framework is governed by California’s remote-seller use tax collection rules were enacted via post-Wayfair legislation and are codified in the Revenue & Taxation Code. If you need the exact statute and effective date for your filing position, contact us for a current review., effective October 1, 2019. The statute treats the registered marketplace facilitator as the retailer of facilitated sales for sales-tax purposes.
Crucially, the CDTFA’s Tax Guide for the Marketplace Facilitator Act expressly provides that a marketplace seller is generally required to be registered with CDTFA if it is engaged in business in California because of physical presence — and physical presence includes maintaining inventory in California. The CDTFA states verbatim: “A sufficient physical presence … includes … Maintaining inventory … in California.”
This means the marketplace-only registration relief in California’s remote-seller collection authority is found in the Revenue & Taxation Code; the controlling subsection depends on the seller’s facts. If you need the specific citation, contact us for a current review. does NOT apply when the seller has independent physical-presence nexus from FBA inventory.
Rate complexity: California uses a modified-origin sourcing system, with a 7.25% statewide minimum combined rate (6% state + 1.25% mandatory local), plus optional district taxes ranging from 0.125% to 2%+ per district, and combined rates can reach approximately 10.75%-11.25% in some jurisdictions. The CDTFA publishes an address-level rate lookup at maps.cdtfa.ca.gov.
For more on California compliance specifically, see our California sales tax guide.
Texas
Texas adopted its marketplace facilitator law through HB 1525 (2019), effective October 1, 2019. The Texas Comptroller treats marketplace providers as the seller for sales-tax purposes on facilitated sales. Texas’s economic nexus threshold for remote sellers is generally $500,000 in total Texas revenue — a high threshold that mirrors California’s. Texas’s local tax regime uses single-local-use-tax-rate options for remote sellers.
Specific rate, threshold, and Comptroller-policy questions for Texas are facts-specific. If you have inventory in Texas (an FBA state) and a hybrid direct-plus-marketplace footprint, contact us for a current review.
Florida
Bottom line: FBA inventory in Florida creates physical-presence nexus and a registration obligation, even when Amazon collects on facilitated sales.
Florida adopted its marketplace facilitator law through SB 50 (2021), creating Fla. Stat. §212.05965, effective Florida’s marketplace facilitator and remote-seller collection law took effect on a specific date that should be confirmed against current Department of Revenue guidance. If you sell into Florida, contact us for a current review.. Florida is one of the most recent major-economy states to adopt MF — it was the second-to-last state with a general sales tax to do so, behind only Missouri.
Florida’s economic nexus threshold is $100,000 in retail sales delivered into Florida, with no transaction count. The state rate is 6%, plus discretionary county surtax of 0.5%-1.5%, with the discretionary surtax capped at the first $5,000 of any single-item sale.
Marketplace sellers with FBA inventory in Florida must register because the inventory creates independent physical-presence nexus under Florida’s remote seller and marketplace provider rules are codified in Chapter 212 of the Florida Statutes, with the controlling section depending on the issue. If you need the specific citation, contact us for a current review.. Sellers receive a Certificate of Registration (DR-11) and an Annual Resale Certificate (Form DR-13) upon approval.
Florida also offers a collection allowance of 2.5% on the first $1,200 of tax due (capped at $30/month) for timely filers.
New York
New York adopted its marketplace provider rules through the FY 2019-2020 budget bill, generally effective June 1, 2019. The state’s economic nexus threshold is generally $500,000 AND 100 sales (conjunctive), making it one of the more nuanced thresholds. New York’s MF law treats the marketplace provider as the vendor for facilitated sales. Specific facts depend on where inventory is located and the seller’s direct-channel volume; if you sell into New York and have FBA exposure, contact us for a current review.
Illinois
Bottom line: Illinois has a unique FBA carve-out that is one of the most seller-friendly in the US.
Illinois operates a two-tax system: Retailers’ Occupation Tax (ROT) under 35 ILCS 120 and Use Tax under 35 ILCS 105. The Leveling the Playing Field for Illinois Retail Act consolidated MF treatment effective January 1, 2021.
The Illinois Department of Revenue’s FAQ on Marketplace Facilitators states that inventory used solely to fulfill orders made over a marketplace does NOT create physical-presence nexus for the marketplace seller. Per IDOR: “If the inventory is used strictly to fulfill orders made over the marketplace, the inventory does not create physical presence nexus.”
Implication: an FBA-only seller whose 100% of Illinois sales are facilitated by Amazon and whose Illinois inventory is used solely for marketplace fulfillment does not need to register with IDOR. This is one of the most favorable carve-outs in the country.
Caveat: the carve-out collapses the moment the seller adds Shopify direct sales, because the inventory is no longer used “solely” for marketplace fulfillment. The seller must then register and is subject to ROT/Use Tax for direct-channel sales.
Illinois’s economic nexus threshold is Effective January 1, 2026, Illinois’s economic nexus threshold is $100,000 or more in gross receipts; the 200-transaction prong is eliminated (see Illinois DOR FY 2026-13)., with the state ROT rate at As of January 1, 2026, the Illinois state sales tax rate is 6.25% on general merchandise, with the 1% low rate applying only to qualifying drugs and medical appliances; the 1% state tax on grocery food has been eliminated (see Illinois Tax Matrix, PIO-101)..
Pennsylvania
Pennsylvania adopted MF rules effective April 1, 2018 (notice and report) and July 1, 2019 (collection requirement). The state’s economic nexus threshold is generally $100,000. Pennsylvania has historically required marketplace-only sellers to register if they have inventory in the state. Specific registration mechanics for hybrid Pennsylvania sellers can turn on facts; if you have Pennsylvania exposure, contact us for a current review.
Washington
Bottom line: Washington’s B&O tax does NOT shift to the marketplace facilitator. Sellers still owe and file B&O on marketplace sales.
Washington has two separate tax regimes:
- Retail sales tax — the marketplace facilitator collects this on facilitated sales.
- Business & Occupation (B&O) tax — a gross receipts tax that the seller still owes on its sales activity, even when those sales are facilitated through a marketplace.
This is a critical compliance trap. Many marketplace sellers assume that because Amazon collects retail sales tax in Washington, they have no Washington filings. They are wrong: the seller still owes B&O tax (typically wholesaling B&O) and must register with the Washington Department of Revenue and file B&O returns.
The B&O tax rates and classifications, registration thresholds, and exact treatment of marketplace-facilitated sales for B&O purposes are nuanced and have been amended multiple times. If you sell into Washington at any meaningful volume, contact us for a current review and read our Washington B&O tax guide for remote sellers.
Colorado (home-rule cities)
Bottom line: Colorado’s state MF law does NOT bind self-administered home-rule cities like Denver, Boulder, and Colorado Springs. You may need separate registrations with each home-rule city.
Colorado is a home-rule state. The Colorado Department of Revenue administers Colorado’s state sales tax rate is among the lowest in the country, though combined state-and-local rates can be substantially higher depending on jurisdiction. If you need a current rate for a specific Colorado address, contact us for a current review., plus state-collected local taxes. But Colorado has a significant number of home-rule cities that administer their own sales tax independently of the state, and the list and registration mechanics change over time. If you sell into Colorado home-rule jurisdictions, contact us for a current review..
A single state Colorado registration does NOT cover home-rule cities. Each home-rule city requires its own registration and filing. Colorado’s Sales & Use Tax System (SUTS) portal (Colorado offers a state-administered Sales & Use Tax System (SUTS) that consolidates filing for participating jurisdictions, though not all home-rule cities participate. If you need help registering or filing through Colorado SUTS, contact us for a current review.) has consolidated some of this, but does not unify all home-rule city filings.
Whether the state MF law’s collection-shift to the marketplace facilitator extends to home-rule cities depends on each home-rule city’s ordinance. Most home-rule cities have adopted parallel MF rules — but not all, and effective dates vary. SaaS, in particular, is taxed at the local home-rule level in cities like Denver (Denver taxes SaaS at 5.15%) even though it is exempt at the state level.
For specific home-rule city exposure, see our Colorado home-rule cities sales tax guide or contact us for a current review.
Louisiana (parishes)
Louisiana is the only US state where local sales tax is administered at the parish (county) level rather than at the state level for most purposes. The Louisiana Sales and Use Tax Commission for Remote Sellers was created to consolidate remote-seller and marketplace facilitator collection at a single statewide point — but the underlying parish complexity remains for sellers with physical presence. If you have Louisiana exposure, see our Louisiana parish sales tax guide or contact us for a current review.
Alabama (Simplified Sellers Use Tax)
Bottom line: Alabama offers remote sellers a flat 8% Simplified Sellers Use Tax (SSUT) option in lieu of the standard local-rate-by-jurisdiction compliance — but SSUT is NOT available to sellers with FBA inventory in Alabama.
Alabama’s standard sales tax rate is Alabama imposes a state sales tax plus local rates that can push the combined rate well above the state component, making Alabama one of the higher combined-rate jurisdictions. If you need a current rate for a specific Alabama address, contact us for a current review.. To simplify compliance for remote sellers without physical presence, Alabama created the Simplified Sellers Use Tax program, which allows remote sellers to opt into a flat 8% rate (4% state + 4% local) in lieu of registering with each Alabama jurisdiction.
SSUT does NOT apply to sellers with FBA inventory in Alabama, because FBA inventory creates physical-presence nexus, and SSUT is reserved for sellers without physical presence. If Amazon adds an Alabama warehouse for a seller currently using SSUT, the seller must register and collect at standard local rates.
Alabama’s MF law was effective Alabama’s economic nexus and SSUT collection obligations took effect on a state-specific date that should be confirmed against current Department of Revenue guidance. If you sell into Alabama, contact us for a current review., and the economic nexus threshold is $250,000 — higher than the typical $100,000. See our Alabama Simplified Sellers Use Tax guide for more.
Special Cases: Gross Receipts, B&O, and Hybrid Tax States
Marketplace facilitator collection does not always extend to gross-receipts-style taxes. Four states have non-sales-tax regimes that catch marketplace sellers off-guard.
Washington B&O tax
As covered above, Washington’s B&O tax is a gross receipts tax that runs in parallel with the retail sales tax. Marketplace facilitators collect retail sales tax on facilitated sales, but the seller still owes B&O on its gross receipts from those sales — typically at the wholesaling B&O rate when the marketplace is treated as the retailer. Sellers must register with the Washington Department of Revenue separately for B&O purposes.
New Mexico Gross Receipts Tax
New Mexico does not have a “sales tax” in the traditional sense. It has the Gross Receipts Tax (GRT), which is imposed on the seller (or “vendor”) for the privilege of doing business in New Mexico, but is generally passed through to the customer. The 2019 HB 6 and subsequent amendments brought marketplace providers into the GRT collection net, but sourcing rules and certain seller obligations have evolved. Specific GRT treatment for marketplace sellers depends on the facts and the most current Taxation and Revenue Department guidance. If you sell into New Mexico, contact us for a current review.
Hawaii General Excise Tax
Bottom line: Hawaii’s GET is imposed on the seller’s gross income, not on the buyer. Even when a marketplace facilitator collects at the retail rate, the seller may still need to file and pay GET at the wholesale rate.
Hawaii has no sales tax. Instead, it has the Hawaii imposes a General Excise Tax in lieu of a traditional sales tax, codified in the Hawaii Revised Statutes. If you need the controlling GET citation or to confirm how it applies to your activity, contact us for a current review., which is a gross-receipts-style tax on the seller. GET applies to virtually everything — there is no general food, service, or SaaS exemption.
Per Hawaii’s TIR 19-03 (as amended), when a marketplace facilitator collects GET on facilitated sales, the marketplace facilitator collects at the retail rate of 4% (plus county surcharge — for example, the 0.5% Oahu surcharge). The marketplace seller is then treated as making a wholesale sale to the marketplace facilitator and may owe GET at the wholesale rate of 0.5% on that wholesale transaction.
Practical consequence: if you have FBA inventory in Hawaii, you need to register for a Hawaii GET license and file Form G-45 monthly, quarterly, or annually — even if Amazon is collecting GET on facilitated sales.
Hawaii’s economic nexus threshold for GET purposes is Many states use a sales-or-transactions economic nexus threshold, but the dollar amount, transaction count, and whether both prongs still apply vary by state and have changed in recent years. If you need to confirm the current threshold for a specific state, contact us for a current review..
Ohio Commercial Activity Tax (CAT)
Ohio’s Commercial Activity Tax is a gross receipts tax imposed on businesses with Ohio-sourced gross receipts above a threshold. The CAT regime has been amended multiple times, with the threshold for filing changing meaningfully in 2024. Marketplace facilitator law generally addresses Ohio sales tax — not CAT. Marketplace sellers may still owe and file CAT independently. If you sell into Ohio at meaningful volume, contact us for a current review.
Do You Still Need to Register if You Only Sell on Marketplaces?
The short answer: it depends on (a) whether you have physical presence in the state, and (b) whether the state requires marketplace-only sellers to register regardless.
The decision tree below applies to a seller who sells exclusively through Amazon, eBay, Walmart, Etsy, or another marketplace facilitator.
Decision tree
- Do you have FBA or other inventory in the state?
- Yes → You generally have physical-presence nexus. Most states require registration. (Exceptions: Illinois, Arizona — see below.)
- No → Continue.
- Does the state require marketplace-only sellers to register regardless of physical presence?
- Some states do; many do not. Review the state DOR’s marketplace seller FAQ.
- Are you above the state’s economic nexus threshold based on your direct-channel sales?
- Yes → Register and collect on direct-channel sales.
- No → Generally no registration required.
States with explicit FBA carve-outs for marketplace-only sellers
- Arizona: Per the Arizona Department of Revenue’s TPT Licensing page: “Regardless of its physical presence with Arizona, a marketplace seller is not required to obtain a TPT license if it only sells its products through marketplace facilitators.” This is one of the most explicit and seller-friendly carve-outs in the country. Note that this is the verified ADOR position; an earlier reading of Arizona case law had pointed in a different direction, but the live ADOR guidance prevails.
- Illinois: Per IDOR’s MF FAQ, inventory used solely for marketplace fulfillment does not create physical-presence nexus — see Illinois deep-dive above.
States that generally require registration even for marketplace-only sellers with inventory
- California: FBA inventory triggers Seller’s Permit registration regardless of marketplace-only status. Per CDTFA’s MF Tax Guide, the marketplace-only relief in R&TC §6042 does not apply when the seller has physical presence.
- Florida: FBA inventory triggers registration under Fla. Stat. §212.0596 physical-presence rules.
- Hawaii: GET applies to the seller’s gross income — registration required even when marketplace facilitator collects.
- Washington: B&O tax obligation persists even when marketplace facilitator collects retail sales tax.
Zero-return filing obligations
In states where you are registered but have no taxable activity in a period (e.g., a quarter with no Shopify sales and Amazon collecting on FBA sales), most states require you to file a “zero return” — a return reporting $0 in taxable sales — rather than skipping the filing. Failing to file zero returns can trigger non-filer notices, late-filing penalties, and ultimately permit revocation. State DOR systems frequently auto-generate notices when a registered taxpayer skips a period.
If you have multi-state registrations and your direct-channel volume has dropped, contact us for a current review of whether you should de-register, file zero returns, or voluntarily disclose.
Documentation and Audit Defense for Marketplace Sellers
Audit risk for marketplace sellers is real, even when the marketplace collects. State auditors increasingly issue notices to sellers who appear in marketplace 1099-K data but have not registered, or whose direct-channel sales appear to have crossed thresholds.
Records to keep from each marketplace
For audit defense, download and retain the following from each marketplace, on at least a monthly basis:
- Marketplace tax collection report (Amazon’s Marketplace Tax Collection report; eBay’s tax invoice; Etsy’s tax document hub; Walmart’s tax report). This shows what tax the marketplace collected on your behalf, by state and jurisdiction.
- Sales-by-state report showing gross sales, taxable sales, exempt sales, and shipped-to addresses.
- Marketplace facilitator certificates where the marketplace provides one (some states issue these; some marketplaces post them in seller central).
- 1099-K — the marketplace’s annual reporting form to the IRS and (in many states) to the state DOR.
Retain these records for at least 4 years, with longer retention for states with extended statutes of limitations or unfiled-return periods.
Reconciling 1099-K to sales tax filings
Form 1099-K reports the gross amount of marketplace transactions (before refunds, fees, or chargebacks) — not your taxable sales. State DORs increasingly use 1099-K data to identify out-of-state sellers who may have crossed economic nexus thresholds.
When reconciling:
- Gross marketplace receipts (1099-K) ≠ taxable sales (1099-K does not deduct refunds, freight, sales tax collected, or non-taxable sales).
- Marketplace-collected tax is generally not reported on the seller’s sales tax return as the seller’s tax — but many state forms include a line to report and deduct marketplace-facilitated sales (e.g., “marketplace sales already reported by facilitator”).
- Failing to deduct marketplace sales on the line that allows it can result in double taxation in audit — once by the marketplace, once by the seller. Read the line instructions on each state’s form carefully.
For a deeper walk-through, see our 1099-K sales tax reconciliation guide.
Common audit notice types
The most common notices marketplace sellers receive include:
- Failure-to-register notice — state DOR identifies the seller from 1099-K or marketplace facilitator reporting and asserts a registration obligation.
- Threshold-crossed notice — state DOR asserts the seller has crossed economic nexus based on apparent gross receipts.
- Non-filer notice — registered seller has missed a filing period.
- Reconciliation notice — discrepancy between marketplace-reported and seller-reported sales.
- B&O / GRT / GET notice — gross-receipts state asserts the seller owes a non-sales-tax obligation despite marketplace collection.
When you receive any of these notices, document everything immediately, do not ignore the deadline, and respond in writing. If the underlying facts support the assertion, consider voluntary disclosure for any unfiled periods. See our VDA guide.
Recent Changes and 2026 Outlook
2023-2024 legislative changes
The most consequential MF developments since 2023:
- Missouri: the last US state with a general sales tax to adopt an MF law, effective January 1, 2023, under SB 153 / SB 97 (2021).
- Elimination of 200-transaction thresholds: several states have repealed the 200-transaction prong of their economic nexus tests, making the test a single-prong dollar threshold only. States that have moved in this direction include Louisiana, South Dakota, Wyoming, Indiana, New Jersey, Maine, and others. Effective dates vary; verify against the live state DOR page before relying on a specific date.
- Kansas: SB 50 (2021) introduced a $100,000 threshold effective Several states adopted or amended marketplace facilitator and economic nexus rules with mid-year effective dates, and the right date depends on the state. If you need to confirm the controlling effective date for your fact pattern, contact us for a current review.. Pre-SB 50, Kansas had no de minimis threshold, attempting to require all remote sellers to register.
- Kansas grocery rate: Kansas’s state grocery rate phased down to 0% effective January 1, 2025 under HB 2106, although local sales tax still applies fully to groceries. Marketplace sellers selling groceries into Kansas should review their tax category mapping.
- Florida: July 1, 2021 effective date for SB 50 brought Florida into the MF regime relatively late, alongside Florida’s first-time economic nexus statute, measured on a previous or current calendar year basis.
Pending 2026 legislation to watch
- Illinois: continued refinement of the Leveling the Playing Field Act and ROT/Use Tax sourcing for hybrid sellers; verify current status before relying on any specific provision.
- Alaska: the Alaska Remote Seller Sales Tax Commission Uniform Code continues to evolve; the 200-transaction threshold was eliminated effective January 1, 2025, leaving a $100,000 threshold for participating jurisdictions.
- Colorado: SUTS portal expansion and home-rule city participation continue to evolve.
Trend: elimination of transaction-count thresholds
The clear multi-year trend is toward $100,000-only thresholds, eliminating the 200-transaction prong that was originally adopted from the Wayfair facts (the South Dakota statute upheld in Wayfair was $100,000 OR 200 transactions). The 200-transaction prong has proven administratively burdensome and has been criticized for capturing low-value sellers who are not the original target of economic nexus.
Don’t want to figure this out yourself?
Marketplace facilitator nexus is one of the most over-engineered areas of US sales tax — different rules in every state, hidden zero-return obligations, B&O / GET / CAT layers on top of sales tax, audit-trail expectations that change between states. If you’re a cross-border seller (Amazon FBA, Shopify direct from outside the US, Walmart, eBay) and the matrix above just made you tired, that’s the gap Sales Tax Compliance USA fills. We handle the whole thing for one fee — multi-state nexus assessment, registration, monthly filings, B&O / GET / CAT reporting where it applies, and audit defence — so you stop trying to learn another tax system and just get on with the business. Book a free consultation or learn more about our sales tax compliance service.
Frequently Asked Questions
Does Amazon collecting sales tax mean I don’t need to register in any state?
No. Amazon’s collection generally satisfies the collection obligation on facilitated sales, but you may still need to register if you have (a) physical presence in the state (e.g., FBA inventory), (b) direct-channel sales above the state’s economic nexus threshold, or (c) gross-receipts-style obligations (Washington B&O, Hawaii GET, New Mexico GRT, Ohio CAT). California, Florida, Hawaii, and Washington in particular require registration despite Amazon collection in many fact patterns.
Do my Amazon sales count toward economic nexus thresholds for my Shopify store?
It depends on the state. Some states aggregate all sales (direct + marketplace) when measuring the seller’s threshold; others exclude marketplace sales. California’s $500,000 threshold under R&TC §6203(c)(4) is measured on combined sales. Other states’ rules vary. If you have hybrid exposure, contact us for a current review.
Which states require marketplace-only sellers to file zero returns?
Generally, any state where you are registered requires periodic returns even if you have no taxable activity in the period. The frequency (monthly, quarterly, annually) is set by the state based on your tax liability. Failing to file zero returns leads to non-filer notices and penalties.
What happens if my marketplace doesn’t collect tax in a state where I have nexus?
You are responsible for collecting and remitting the tax yourself. This can happen when (a) the marketplace is not registered in a particular state, (b) the platform is not a “marketplace facilitator” under the state’s definition (some smaller platforms or referral networks are not), or (c) the platform collects only for some product categories.
How do marketplace facilitator laws apply to home-rule cities in Colorado and Alabama?
Colorado’s state MF law does not automatically bind home-rule cities; each home-rule city’s ordinance governs. Most major Colorado home-rule cities have parallel MF rules, but coverage and effective dates vary. Alabama is unified at the state level via SSUT for remote sellers, but sellers with FBA inventory must comply with state and local rates jurisdiction-by-jurisdiction.
Do I owe Washington B&O tax on marketplace sales even if Amazon collects retail sales tax?
Yes. Washington’s B&O tax is a separate gross-receipts-style tax on the seller, not on the buyer. It is not displaced by the marketplace facilitator’s retail sales tax collection. Marketplace sellers with Washington nexus generally owe wholesaling B&O on their marketplace sales.
When did Missouri’s marketplace facilitator law take effect?
Missouri’s marketplace facilitator law took effect January 1, 2023, under SB 153 / SB 97 (2021). Missouri was the last US state with a general sales tax to adopt an MF regime.
Can I deregister from a state if I switch to selling only through Amazon?
Possibly, depending on the state. Some states (Illinois, Arizona) have explicit carve-outs for marketplace-only sellers without physical presence. Others (California, Florida, Hawaii, Washington) require continued registration if FBA inventory or other physical presence remains. Before deregistering, verify whether you will retain inventory in the state and whether the state allows reactivation if you resume direct sales. Contact us for a current review.
How do I reconcile my 1099-K with sales tax that the marketplace already collected?
Form 1099-K reports gross marketplace receipts, not taxable sales. On most state returns, you can deduct marketplace-facilitated sales on a designated line so they are not taxed twice. Read each state’s line instructions carefully. See our 1099-K sales tax reconciliation guide.
Are marketplace sales included in the $100,000 economic nexus threshold?
It depends on the state. In California, total combined sales — including marketplace sales — count toward the $500,000 threshold per R&TC §6203(c)(4). Other states exclude marketplace sales from the seller’s threshold test. Always check the specific state’s economic nexus statute and DOR guidance.
Author’s Commentary
Paul le Roux, CA(SA): The most common notice I see in our practice is the “failure-to-register” letter sent to FBA sellers six to twelve months after Amazon adds inventory in a new fulfillment center. The seller assumed Amazon’s collection covered everything; the state DOR pulled 1099-K and FBA inventory data and disagreed. The fix is almost always voluntary disclosure (VDA) before the state escalates — but the window for VDA closes the moment the state contacts the seller. If you have any uncertainty about FBA exposure in a state, do the analysis now, not after the notice arrives.
The second most common issue is the threshold-inclusion question for hybrid Shopify-plus-Amazon sellers. Sellers underestimate California exposure because they only look at Shopify sales; CDTFA looks at combined sales. The third is Washington B&O — sellers who are clean on retail sales tax (because Amazon collects) discover years later that they owe wholesaling B&O on the same sales.
When in doubt, document your inventory locations monthly (Amazon’s Inventory Event Detail Report makes this easy), download your marketplace tax reports, and have a written nexus analysis on file. That trio resolves 80% of marketplace audit notices.
Last verified: 2026-05-09
This article is for informational purposes only and does not constitute tax advice. Consult a licensed tax professional before acting on any of this content.
