Online marketplace sellers may still need help with sales tax

A client tells you not to worry about sales tax because Amazon or Etsy already collected it. That sounds simple enough, until you learn they also sell through Shopify, store inventory through Fulfillment by Amazon (FBA) or recently got a notice from a state tax department.

For tax pros, that’s the real issue. Marketplace sales tax collection can help, but it doesn’t always mean the client is in full compliance.

Quick take for tax pros

• Marketplace sellers sell through platforms like Amazon, Etsy, eBay, Poshmark or Walmart Marketplace
• Marketplace sales tax collection does not always eliminate seller responsibility
  • Direct sales, inventory locations and state-specific rules can still create obligations
• Some clients may need registration, filings or historical review, even when the platform collected tax
• Tax pros should help clients learn to move from “tax was collected” to “we’re fully compliant”

A tax pro’s role in the marketplace sales tax collection story

Marketplace facilitator laws changed the way many online sales are taxed. In general, the selling platform collects and remits sales tax for marketplace transactions. That has made compliance easier for many sellers, but it has also created confusion. Many seller clients hear “the marketplace handles it” and assume the issue is closed. 

In practice, tax pros know it’s not that simple. A client may still have filing responsibilities, direct sales outside the platform, inventory in multiple states or unanswered questions about where nexus exists. That’s where your role becomes important. Clients don’t just need someone to confirm what Amazon collected. They need someone to explain what’s still their responsibility.

When marketplace sellers may still have exposure

A marketplace seller can still have sales tax risk in several common situations.

First, the client may be a hybrid seller. That means they sell through a marketplace and also through their own website. Even if the platform collects tax on marketplace orders, the client may still need to register and collect tax on direct sales.

Second, inventory can change the picture. If the client uses FBA or another third-party fulfillment provider, inventory may be stored in multiple states. That can create a physical presence nexus, even if the client never intended to expand there.

Third, state rules do not all work the same way. Some states may still expect registration, returns or responses to notices, depending on the seller’s facts. A client who assumes one rule applies everywhere can quickly fall behind.

How your practice can advise marketplace sellers

A marketplace seller may say, ‘Amazon took care of it,’ not realizing the platform collected sales tax on only some of the transactions for which the seller is responsible. They may not realize that collection, registration, filing and liability are not always the same thing.

Your client may not owe tax on certain marketplace transactions, but they may still need to track direct sales, review nexus thresholds, monitor inventory locations and keep clean records. If they receive a state notice, they also need to respond with clear documentation.

This is also a great area for proactive client conversations. Online sellers grow fast. A side business on Etsy can quickly expand into Amazon and Shopify sales and multistate inventory before the client realizes the compliance picture has changed.

Compliance checklist for marketplace seller clients

Before you tell a client they’re covered, walk through this checklist:

☐ Confirm where they sell: marketplace only or marketplace plus direct sales.

☐ Identify every platform they use, such as Amazon, Etsy, eBay, Walmart Marketplace or Shopify.

☐ Review where inventory is stored, including FBA and third-party warehouse locations.

☐ Check whether marketplace sales count toward economic nexus thresholds in relevant states.

☐ Determine whether the client may still need to register in any state.

☐ Ask whether they are filing required returns or informational filings where applicable.

☐ Review product setup and taxability treatment across platforms.

☐ Confirm exemption certificates are valid and retained if the client makes exempt sales.

☐ Reconcile marketplace reports with internal records, including returns and refunds.

☐ Ask whether the client has received any state notices or questionnaires.

☐ Consider whether older periods need review if the client delayed compliance or expanded quickly.

Marketplace sellers need clarity, because the platform may handle only part of the process. Your value is helping clients understand the part that still belongs to them.