Sellers on Amazon, eBay, and Etsy often cannot tell who owes the sales tax on each order. A marketplace facilitator is an online platform that lists third-party sellers’ products and collects payment from buyers. A marketplace facilitator law is a state statute that shifts sales tax collection and remittance from the seller to that platform.
All 45 states with a statewide sales tax, plus Washington, D.C., now have a marketplace facilitator law. This guide rebuilds every threshold from state revenue departments and the U.S. Supreme Court record, and stamps each number with a source and a verified date.
What Are Marketplace Facilitator Laws?
Marketplace facilitator laws make the platform, not the third-party seller, responsible for collecting and remitting sales tax on marketplace-facilitated sales. Most states apply a two-part test: the platform (1) lists or advertises third-party products, and (2) collects payment from the customer, directly or indirectly. A marketplace seller is a business that sells through that platform.
Some state definitions are broad enough to sweep in delivery and rental platforms, so several states wrote carve-outs. The California CDTFA Marketplace Facilitator Act guide lists Delivery Network Companies and Vehicle Rental Brokers as not marketplace facilitators, per the California Department of Tax and Fee Administration (CDTFA).
What Does a Marketplace Facilitator Do?
A marketplace facilitator takes on four sales tax duties for the sales it facilitates.
- Tax collection and remittance: applies the correct rate at checkout and remits it to the state.
- Registration: obtains a sales tax permit in every state where it meets nexus thresholds.
- Consolidated filing: files returns covering aggregate third-party transactions.
- Economic nexus monitoring: tracks sales volume and transaction counts against state thresholds.
How Did South Dakota v. Wayfair Create Marketplace Facilitator Laws?
South Dakota v. Wayfair, Inc. let states tax remote sellers on economic activity alone, decided June 21, 2018, by a 5-4 vote, per the U.S. Supreme Court opinion. It overturned National Bellas Hess v. Illinois (1967) and Quill Corp. v. North Dakota (1992), which had required physical presence (office, employees, or inventory) before a state could compel collection. States then passed facilitator laws within roughly two years.
South Dakota’s upheld law used a $100,000 in sales or 200 transactions threshold, the origin of the standard now used nationwide, per the Supreme Court opinion. States found it far easier to collect from a handful of large platforms than from millions of individual sellers.
What Is the Difference Between Physical Nexus and Economic Nexus?
Physical nexus is a traditional in-state connection: an office, employees, a store, or inventory. Economic nexus is triggered purely by crossing a state’s sales revenue or transaction-count threshold. Both can apply at the same time. Inventory stored in an Amazon fulfillment center under Fulfillment by Amazon (FBA) creates physical nexus in that state, separate from economic nexus, and can force a registration duty even where the marketplace collects. Commenda’s US economic nexus exposure guide tracks these thresholds state by state.
What Are the Economic Nexus Thresholds in 2026?
Most states set economic nexus at $100,000 in sales, measured against the current or prior calendar year, which is when the collection obligation activates. A shrinking number still count 200 transactions. Many states dropped the transaction prong because it punished small sellers who ship many low-value orders.
| State | Transaction-Count Prong | Source |
|---|---|---|
| California | Removed | California Department of Tax and Fee Administration |
| Colorado | Removed | Colorado Department of Revenue |
| Iowa | Removed | Iowa Department of Revenue |
| Louisiana | Removed | Louisiana Department of Revenue |
| Maine | Removed | Maine Revenue Services |
| Massachusetts | Removed | Massachusetts Department of Revenue |
| North Dakota | Removed | North Dakota Office of State Tax Commissioner |
| South Dakota | Removed, effective July 1, 2023 | South Dakota Department of Revenue |
| Washington | Removed | Washington Department of Revenue |
| Wisconsin | Removed | Wisconsin Department of Revenue |
| Indiana | Removed | Indiana Department of Revenue |
Thresholds also differ on what they measure: gross sales, retail sales, or taxable sales. Confirm the measure for each state before you count.
Which States Have Marketplace Facilitator Laws?
All 45 states with a statewide sales tax, plus Washington, D.C., have marketplace facilitator laws. The five NOMAD states (New Hampshire, Oregon, Montana, Alaska, Delaware) have no statewide sales tax, though Alaska local jurisdictions apply remote-seller rules through the Alaska Remote Seller Sales Tax Commission. The table below rebuilds the most-misreported thresholds from primary sources.
| State | Facilitator Law Effective Date | 2026 Economic Nexus Threshold | Source | Last Verified |
|---|---|---|---|---|
| Alabama | Jan 1, 2019 | $250,000 retail sales, no transaction count | Alabama Department of Revenue | July 2026 |
| Arizona | Oct 1, 2019 | $100,000 gross (2021 onward) | Arizona Department of Revenue | July 2026 |
| California | Oct 1, 2019 | $500,000, no transaction count | California Department of Tax and Fee Administration | July 2026 |
| Colorado | Oct 1, 2019 | $100,000, no transaction count | Colorado Department of Revenue | July 2026 |
| Connecticut | Dec 1, 2018 | $100,000 AND 200 transactions | Connecticut Department of Revenue Services | July 2026 |
| South Dakota | Mar 1, 2019 | $100,000, no transaction count (repealed 2023) | South Dakota Department of Revenue | July 2026 |
Alabama also lets remote sellers and facilitators collect a flat 8% Simplified Sellers Use Tax (SSUT) instead of varying local rates, per the Alabama Department of Revenue. District of Columbia rules mirror the $100,000 threshold used by most states.
Do Marketplace Sellers Still Need to Register and File Sales Tax?
Often yes. Facilitator collection does not always end a seller’s own obligations. Some states require a seller with nexus to register and keep filing returns, sometimes zero-dollar or informational returns that report marketplace sales as deductions. Physical nexus from FBA inventory can force registration. Sales through your own website or Shopify store stay entirely your responsibility.
Sellers making purchases for resale or exempt business-to-business (B2B) sales must provide valid resale or exemption certificates. Facilitators handle exempt-sale documentation on marketplace transactions, per the CDTFA guidance on purchases for resale by marketplace sellers.
Who Is Liable If the Marketplace Collects the Wrong Tax?
Under facilitator laws, liability for marketplace-facilitated sales sits primarily with the facilitator. Most states relieve the seller unless the seller gave the platform incorrect information, such as a wrong product taxability code. This follows state revenue guidance, including CDTFA’s Marketplace Facilitators’ and Marketplace Sellers’ requirements sections.
How Do Marketplace Facilitator Laws Affect Amazon, eBay, and Shopify Sellers?
Amazon and eBay are marketplace facilitators and collect sales tax in every facilitator-law state. Shopify is not a marketplace, so Shopify store owners must collect and remit tax themselves. The distinction decides who carries the obligation on each channel.
- Amazon FBA: Amazon collects and remits, but FBA inventory can create physical nexus and a registration duty in the storage state.
- eBay: collects and remits on all applicable US marketplace sales.
- Shopify: the seller of record carries the full collection and remittance obligation.
How Do You Stay Compliant With Marketplace Facilitator Laws?
Track nexus in every state where you sell, register where required, keep filing where states demand returns, and reconcile marketplace-collected tax against your own records. Thresholds vary widely, from $100,000 in most states to $500,000 in California, so blanket assumptions create exposure.
- Monitor economic and physical nexus in every state, counting all channels.
- Confirm which sales the marketplace covers and which channels you own.
- Register and file where obligations remain, including zero-dollar returns.
- Keep resale and exemption certificates current.
- Reconcile facilitator reports against your books to avoid double-taxing direct orders.
- Watch for threshold changes, since transaction-prong repeals prove the laws keep moving.
How Commenda Helps With Marketplace Facilitator Compliance
Commenda’s indirect tax software tracks your physical and economic nexus across states, monitors thresholds, and handles registration and filing where seller obligations remain. It connects to 100+ ERPs, APIs, and custom integrations, so transaction and product-tax data syncs from each channel into one dashboard with the source of every sale shown.
Use the US economic nexus exposure guide to check where you have crossed a threshold, and the sales tax calculator to look up current rates. Book a demo call to get your free nexus exposure assessment.
