Sales Tax Questions
Intermediate How-To

How do I handle filing in states where a marketplace collects on my behalf?

⚡ TL;DR

Having a registered permit means you still need to file a return, even when Amazon collected all the tax for you. Report your gross sales, then deduct the marketplace-facilitated amount — the return shows $0 owed but must still be submitted. Skipping it generates a late filing penalty.

Marketplace facilitator laws shift the collection obligation to the marketplace, but in most states, they don’t eliminate your filing obligation if you already have a registered permit. The return still needs to be filed; it just looks different.

The distinction: collection vs. filing

Marketplace facilitator laws require platforms like Amazon, Etsy, and Walmart to collect and remit sales tax on your behalf. That covers the payment side. It doesn’t automatically cover the return filing side for registered sellers.

Most states with a registered permit require you to file a return every period, regardless of whether you owe any tax. The marketplace collected the tax, but your return documents that fact and reports the zero balance you owe.

What the return looks like

If all your sales in a state were through a marketplace facilitator:

Most state returns include a deduction or exemption line for marketplace-facilitated sales:

  1. Enter gross sales (total, including marketplace sales): e.g., $50,000
  2. Deduct marketplace-facilitated sales: ($50,000)
  3. Net taxable sales: $0
  4. Tax owed: $0

You file the return, no remittance is sent, and the period is closed.

If you have a mix of marketplace and direct sales:

  1. Enter gross sales (total): e.g., $80,000
  2. Deduct marketplace-facilitated sales: ($50,000)
  3. Net taxable sales: $30,000 (your Shopify/direct sales)
  4. Tax owed: $30,000 × state rate

You file and remit on the $30,000 direct-channel portion only.

How to get the marketplace sales figures

To fill in the deduction line, you need to know how much of your sales in each state came through marketplace facilitators vs. your own channels.

Amazon: Amazon Seller Central provides transaction-level reports by state (the Transaction report under Tax Document Library). This breaks out Amazon-collected amounts by state and period. Pull this at each filing period.

Etsy/Walmart/eBay: Each platform provides similar reports. Navigate to your seller dashboard → Tax or Finances → Sales Reports, filtered by state and period.

Aggregate into your return: Sum the marketplace-facilitated amounts per state from all platforms combined. That total is your deduction line.

States where marketplace-only sellers may not need to register

If all of your sales in a state run through marketplace facilitators and you have no physical presence there:

  • Several states have clarified that marketplace-only sellers without other nexus don’t need to register separately: the marketplace handles everything
  • These states typically include language like “marketplace sellers with no other nexus are not required to register”

FBA changes this: Amazon FBA stores inventory in third-party warehouses across many states. Having inventory in a state creates physical nexus, which means registration is required even if Amazon handles collection on all your Amazon transactions. The marketplace collects the tax; you still need to register and file because of the physical nexus.

Check each state’s specific guidance if your only activity is marketplace sales and you have no physical presence. The rules vary, and some states have not fully clarified the requirement for marketplace-only sellers.

AutoFile and marketplace deductions

AutoFile platforms that integrate with marketplace data sources can pull the facilitator collection amounts automatically and apply the correct deduction line on each state’s return. Manual entry from platform-by-platform reports works but adds per-period reconciliation time.

Frequently asked questions

Do I still need to file a return in states where Amazon collects sales tax for me?
In most states, yes, if you have nexus and a registered permit, you're required to file a return for every period, even if your only sales were through a marketplace facilitator that collected and remitted on your behalf. The return typically reports your total gross sales and then deducts the marketplace-facilitated portion, resulting in $0 net tax owed from you. Skipping the return entirely (even when you owe nothing) can generate a late filing penalty.
What does a sales tax return look like when all my sales are through Amazon?
Most states provide a 'marketplace facilitator' deduction line on the return. You report your total gross sales (including Amazon sales) and then deduct the marketplace-facilitated amount, which reduces your net taxable sales to zero. The resulting return shows $0 tax owed, but the return is still filed. Some states have separate reporting schedules for marketplace sales.
What if I have both Amazon sales and direct Shopify sales in the same state?
You report both on the same return. Amazon sales go in the marketplace-facilitated column (or deduction line) — those are excluded from your tax owed, since Amazon already collected and remitted. Your direct Shopify sales are your taxable sales, you owe tax on those. The return separates the two and you remit only on the direct channel portion.
What if I only have Amazon sales in a state, can I just not register there?
Not necessarily. Whether you need to register in a marketplace-only state depends on whether you have nexus beyond the marketplace sales themselves. If Amazon's marketplace sales are your only nexus-creating activity, some states don't require you to register: the marketplace handles everything. But if you have any physical presence (FBA inventory, for example), registration is required regardless. FBA inventory in a state creates physical nexus that exists independent of marketplace collection.

Looking for more answers on this topic?

Browse Filing, Frequency & Deadlines

Related questions