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What information do marketplace sellers need to provide in AvaTax?

Overview

You sell through a marketplace facilitator like Amazon, Etsy, or Walmart, and they remit sales tax directly to states with Marketplace Fairness laws. In addition, Avalara remits sales tax on your behalf and you need to know the information Avalara requires so your business does not remit double liability.

Environment

AvaTax

Returns

Resolution

Certain states have Marketplace Fairness laws. If you sell through a marketplace facilitator like Amazon, Etsy or Walmart into these states, the marketplace facilitator collects and remits your sales tax for some states. 

There are two steps you need to take:

  • Create a marketplace location code 
  • Tag transactions from marketplaces with the relevant marketplace location code. To automate this tagging, use the Marketplace Advanced Rule functionality in AvaTax Update to create an advanced rule.

Create a marketplace location code 

Create a location code for each marketplace facilitator that your business uses, and assign these location codes to transactions originating from those marketplaces your business uses, in order to identify and report these transactions correctly. Remember that not all states require online marketplaces to collect and remit tax on your behalf, so make sure to check the laws in the jurisdictions where you do business before setting up your locations in AvaTax Admin Console.

To set up a marketplace facilitator as a location:

  1. In AvaTax Admin Console, go to Organization > Locations and click New to add a location.
  2. Enter details for this location. Use the name of the marketplace as the Location code (example: "Amazon"), and select "Marketplace" from the Type dropdown.
  3. In the Category dropdown, select whether the seller or the marketplace remits tax on sales associated with this marketplace. Check the marketplace's help documentation or call their support line to figure out which option to choose here.
  4. Enter your primary business address in the address information fields.
  5. Choose an Effective date for when you want this location to be available for use on transactions.
  6. When you've set up everything the way you need it, click Save this location.


Use the Marketplace Advanced Rule functionality to set up your advanced rule 

You must go to AvaTax Update to set up your advanced rule.

Click here to see an animated walkthrough to go from AvaTax to AvaTax Update

  • Once you're in AvaTax Upate, follow the directions in this article: Create and Manage Advanced Tax Rules
  • To return to AvaTax Admin Console, see the banner at the top of the AvaTax Update screen.