Watch: Marketplace Facilitators and Sales Tax
More and more businesses rely on marketplace facilitators to put their products in front of customers. But what exactly is a marketplace facilitator? And if they are selling your goods, who’s paying the sales tax? Brandon Mills, CPA answers these questions and more in the latest video from Mize CPAs Inc.
What is a Marketplace Facilitator?
Brandon Mills, CPA: A marketplace facilitator is a marketplace where you sell your products. It would be like Amazon, Etsy, or even a delivery service like DoorDash or Uber Eats.
Why is this Important?
Because many states have started to enact laws that require marketplace facilitators to collect and remit the sales tax on the items they sell for you. So, for instance, if you sell something on DoorDash, normally you would file your sales tax return, all those sales would be on your return. But now the states have changed it, so the marketplace facilitator is actually remitting some of that sales tax for you. This has created a lot of confusion because it’s hard to know exactly what the marketplace facilitator is actually doing and whether or not you’re supposed to be paying sales tax on your own products.
How do I know if the marketplace facilitator is remitting sales tax?
The marketplace facilitator is supposed to notify you when they are collecting and remitting those taxes. States have begun to issue forms where the marketplace facilitator has to sign an affidavit where they are saying “we agree that we are collecting and remitting taxes on these sales”.
How should I file my sales tax return after the marketplace facilitator has collected the sales tax?
Once the marketplace facilitator has collected sales tax and you’ve actually verified that they are remitting it, you need to remove those sales and that sales tax from your return. And it will just be a reduction in the amount that you’re paying.
What should I do if I find out I’ve submitted incorrect returns or owe additional sales tax?
If you discover that your sales tax returns are incorrect because of a marketplace facilitator you can always amend those returns.
What is coming in the future for marketplace facilitators?
Well, the landscape for marketplace facilitators is changing rapidly. These laws are very new and a lot of times they haven’t been thought out all that well. So, there’s always going to be changes and new laws coming out. And we just need to stay on top of these things.
So, if you use third parties for marketplace sales such as Amazon, Etsy, Uber Eats, DoorDash, or whatever. You need to make sure that you’re keeping up with your local laws because these are subject to change and when they do, you need to make sure that you’re contacting your third-party provider and verify that they are actually aware of the changes and keeping up on it as well.