In some states, online marketplace facilitators are required to collect and remit sales tax on your behalf when you make sales on their platforms. If your company uses marketplace facilitators, avoid overpaying on your tax returns by setting up any marketplaces you sell on as locations in AvaTax Update so you can identify and track transactions from those sources.
What is an online marketplace facilitator?
A marketplace facilitator is an online service that sells your products and services and accepts money from customers on your behalf. Websites like Amazon, Etsy, and eBay are the best known examples. Keep an eye on updates from any online marketplaces your business uses, to make sure you're keeping compliant with new laws and policies.
Set up online marketplaces in AvaTax Update
Create a location code for each marketplace facilitator that your business uses. Assign these location codes to transactions originating from those marketplaces in order to identify and report these transactions correctly.
To set up a marketplace facilitator as a location:
- Use the name of the marketplace as the location code (example: "Amazon").
- Enter "Marketplace" as the location description.
- Set the type of location to "Location."
- Select "Other" for the category.
- Enter your primary business address in the address information fields.
If you file tax returns on your own, remember to filter out transactions from marketplaces that remit tax on your behalf when you're putting your returns together. If you use Returns, transactions associated with those marketplaces are automatically excluded from your returns.