Marketplace Tax Collection FAQ
What is a Marketplace Facilitator (MPF)?
In the United States, a marketplace facilitator is commonly defined as a business who contracts with third party sellers to promote the sale of physical property, digital goods, and/or services owned and supplied by a third party through an online store. Based on this definition, Amazon is a marketplace facilitator for third party sales facilitated through our store and is responsible to calculate, collect, remit, and refund sales and use tax on orders shipped to a jurisdiction (state, county, city, district) that has enacted marketplace facilitator or similar laws.
What is Marketplace Tax Collection (MTC)?
Marketplace Tax Collection is a common term Amazon uses for marketplace facilitator tax legislations. Marketplace facilitator rules can be country, state, and/or jurisdiction specific (country, state, county, city, district). These rules identify the party responsible to collect and remit sales and use tax for orders shipped to a jurisdiction where marketplace facilitator laws have been enacted. In these jurisdictions, Amazon will be responsible to calculate, collect, remit (as the taxpayer), and refund sales and use taxes.
Who does Marketplace Tax Collection apply to?
Marketplace Tax Collection applies to all sellers in all Amazon stores with an order destined to a US jurisdiction (state, county, city, district) where Marketplace Tax Collection laws have been enacted. All sellers must agree to automatic Marketplace Tax Collection (MTC), irrespective of their location or the volume or quantity of sales made by the seller.
What is the difference between Marketplace Tax Collection and Tax Calculation Services?
- Marketplace Tax Collection (MTC) occurs on orders destined to a jurisdiction (state, county, city, district) where Marketplace Facilitator or similar laws have been enacted. For the taxes on these orders, Amazon will be responsible to calculate, collect, and remit sales tax, and refund the sales and use tax. Amazon (as the taxpayer) will remit MTC taxes collected directly to the tax authority, according to each state’s legislation.
- Tax Calculation Service (TCS) is a service available to Professional sellers on the United States and Canadian stores, and VAT Calculation Service (VCS) for sellers in Amazon’s European Union and Japanese stores, who have an obligation to calculate taxes on their orders that originate within and are destined within the home marketplace. Taxes calculated using TCS and VCS are disbursed to the seller to remit and report to the appropriate tax authority.
Where and when will Amazon automatically calculate, collect, and remit sales tax?
Amazon will become the taxing seller of record and be responsible to calculate, collect, and remit sales and use tax on orders shipped to customers in the following states (unless otherwise identified in your Tax settings) on the effective date:
Planned Marketplace Tax Collection Jurisdictions:
| Jurisdiction | Effective Date (subject to change) | State Resource |
|---|---|---|
| Tennessee | October 1, 2020 | Link |
Active Marketplace Tax Collection Jurisdictions:
| Jurisdiction | Effective Date | State Resource |
|---|---|---|
| Alabama | January 1, 2019 | Link |
| Alaska* | April 1, 2020 | Link |
| Arizona | October 1, 2019 | Link |
| Arkansas | July 1, 2019 | Link |
| California | October 1, 2019 | Link |
| Colorado* | October 1, 2019 | Link |
| Connecticut | December 1, 2018 | Link |
| District of Columbia | April 1, 2019 | Link |
| Georgia | April 1, 2020 | Link |
| Hawaii | January 1, 2020 | Link |
| Idaho | June 1, 2019 | Link |
| Illinois* | January 1, 2020 | Link |
| Indiana | July 1, 2019 | Link |
| Iowa | January 1, 2019 | Link |
| Kentucky | July 1, 2019 | Link |
| Louisiana | July 1, 2020 | Link |
| Maine | October 1, 2019 | Link |
| Maryland | October 1, 2019 | Link |
| Massachusetts | October 1, 2019 | Link |
| Michigan | January 1, 2020 | Link |
| Minnesota | October 1, 2018 | Link |
| Mississippi | July 1, 2020 | Link |
| Nebraska | April 1, 2019 | Link |
| Nevada | October 1, 2019 | |
| New Jersey | November 1, 2018 | Link |
| New Mexico | July 1, 2019 | Link |
| New York | June 1, 2019 | Link |
| North Carolina | February 1, 2020 | Link |
| North Dakota | October 1, 2019 | Link |
| Ohio | September 1, 2019 | Link |
| Oklahoma | July 1, 2018 | Link |
| Pennsylvania | April 1, 2018 | Link |
| Puerto Rico | July 1, 2020 | Link
For more information, refer to this link. |
| Rhode Island | July 1, 2019 | Link |
| South Carolina | April 29, 2019 | Link |
| South Dakota | March 1, 2019 | Link |
| Certificate of Collection | ||
| District of Columbia | April 1, 2019 | Link |
| Texas | October 1, 2019 | Link |
| Utah | October 1, 2019 | Link |
| Vermont | June 6, 2019 | Link |
| Virginia | July 1, 2019 | Link |
| Washington | January 1, 2018 | Link |
| West Virginia | July 1, 2019 | Link |
| Wisconsin | January 1, 2020 | Link |
| Wyoming | July 1, 2019 | Link |
*See your Tax settings for additional information and options. Colorado and Illinois have unique marketplace tax collection legislation in place. Visit Marketplace Tax Collection for Colorado FAQ, Marketplace Tax Collection for Illinois FAQ, and Marketplace Tax Collection for Alaska FAQ for more information.
If I sell in an Amazon store other than Amazon.com or my business resides outside of the US, does Marketplace Tax Collection apply to my orders?
Shipments from any Amazon store into a US state or jurisdiction that has implemented Marketplace Facilitator legislation will be subject to Marketplace Tax Collection.
Who is responsible for calculating and remitting tax on US non-marketplace facilitator orders?
For orders shipped to customers in all non-marketplace facilitator states; or taxing jurisdictions, and/or where Marketplace Tax Collection is not implemented, the seller remains responsible for their tax remittance and reporting obligations.
Sellers’ existing tax calculation settings will still apply for non-Marketplace Tax Collection states or jurisdictions supported by the Tax Calculation Service and identified in your Tax settings. For more information about Amazon's Tax Calculation Services, see Tax Calculation Services Terms.
Will my sales tax obligation change?
Your sales tax reporting obligation will depend on each state’s legislation. You should work with your tax advisor to identify any changes to your personal or corporate tax-reporting obligation in states where Amazon automatically calculates, collects, and remits sales tax.
Is Marketplace Tax Collection due to the U.S. Supreme Court decision in the Wayfair case?
No, Marketplace Tax Collection is a result of individual state legislation enacting Marketplace Facilitator or similar laws. You should work with your tax advisor regarding any personal or corporate tax obligation you may have in states where Amazon does not automatically calculate, collect, and remit sales tax.
For additional information, see the U.S. Supreme Court decision on Wayfair FAQ.
How does Amazon determine item taxability?
For orders destined to a Marketplace Tax Collection jurisdiction, Amazon will determine an item’s taxability using the product category and item description provided or selected while creating the listing. Amazon does not utilize your product tax code assignment or tax calculation settings for this determination.
Do I need to do anything?
Typically, there is no need to update your tax calculation settings when Marketplace Tax Collection begins. Your existing tax calculation settings, order details, and payments reporting will update automatically to reflect Amazon’s responsibility. If any tax responsibility remains with a seller, your tax settings will reflect your state specific options.
You should work with your tax advisor or the state to identify changes to your reporting and any personal or corporate tax obligation.
Can I edit my tax calculation settings for a state with Marketplace Tax Collection?
A marketplace facilitator rules and/or legislation can contain a mixed tax responsibility, meaning both seller and facilitator could be responsible for all or a portion of tax (for example: Alaska, Colorado and Illinois) and/or product exclusions, meaning a specific product type is excluded nor not included in marketplace facilitator rule (see next question for exclusion information). Your options to calculate tax in these specific scenarios will be updated in your Tax Settings as functionality and improvements become available.
What is an exclusion from Marketplace Tax Collection and how do I understand my responsibility?
An exclusion occurs when marketplace facilitator rules and/or legislation limit or prohibit a marketplace facilitator from calculating, collecting, and remitting certain taxes.
For example, marketplace facilitator rules do not apply to rental tax in Alabama or services sold in New York. These exclusions prevent Amazon from calculating, collecting, and remitting these taxes and that specific tax obligation remains with the seller. To accommodate the Alabama and New York exclusions, improvements were made to our Tax Settings by adding additional options for sellers to continue managing their tax obligation when an exclusion applies.
In some scenarios, marketplace facilitator rules and the resulting tax obligation are more complicated. For example, marketplace facilitator laws do not apply to home-rule jurisdictions in Colorado, the retail occupation tax (ROT) in Illinois, or local sales and use tax on orders destined to non-participating jurisdictions in Alaska. While Amazon can collect tax in Colorado’s state-administered jurisdictions, state use tax in Illinois, and local sales and use tax for Alaska’s participating jurisdictions, you may potentially still have an obligation to remit tax for orders shipped to these jurisdictions, even though you cannot calculate and collect the tax from buyers on your orders through Amazon's Tax Calculation Services.
In these situations, Amazon is prioritizing enhancements to our Tax Calculation Services to support these scenarios. In the meantime, we encourage you to work with your tax professional to determine any impact to your business.
Do I need to remit sales tax to states with automatic Marketplace Tax Collection?
You do not need to remit sales and use tax Amazon automatically calculated, collected, and remitted under Marketplace Tax Collection. Your Marketplace Tax Collection report will reflect the sales tax amount Amazon collected as a deduction in the Marketplace Facilitator or Marketplace Withheld Tax column of your reports.
Any tax that is collected using your Tax Calculation Settings or any tax amount deducted by Amazon that is less than the amount collected from the buyer remains the sellers responsibility to remit to the appropriate government authority and will be reflected in your Sales Tax Report.
Amazon does not report or remit taxes on behalf of any seller to government authorities. If you have double remitted sales and use tax from your Amazon orders to a state with Marketplace Tax Collection, you will need to work with your tax advisor and/or state to determine your refund options.
How does Amazon report taxes under Marketplace Tax Collection?
Amazon will report and remit sales and use tax automatically collected under marketplace facilitator legislation that is identified as such in your reporting options to the appropriate tax authority based on the requirements of each tax authority or jurisdiction rule. Amazon does not report or remit taxes on behalf of any seller to government authorities.
Will I receive regular statements of Amazon-collected sales tax?
Yes, your Payments report will continue to reflect sales and use tax collected on an order with a separate deduction for “Marketplace Withheld Tax” or “Marketplace Facilitator” (depending on the report) which represents sales and use tax Amazon automatically collected. Amazon will remit the deducted amount to the appropriate tax authority, based on the marketplace facilitator rules at the order destination.
You may need to add optional Marketplace Tax Collection columns on some reports. See your reporting options below for additional information.
What are my reporting options and how do I identify Amazon-collected sales tax?
Marketplace Tax Calculation details are available in the Tax Document Library, Marketplace Tax Collection Report. See Sales Tax Information in Seller Reports Help page for additional information.
For individual order details, use the Order Details or Transaction Detail pages. When Tax Collection Model equals Marketplace Facilitator and Tax Collection Responsible Party equals Amazon, sales tax was automatically collected by Amazon.
For a summary of multiple order details, use the Date Range Report or Order Report (orders you fulfill) and see the report specific information below.
- The Sales Tax Collected column reflects the amount of tax collected.
- The Marketplace Facilitator Tax or Marketplace Withheld Tax (depending on the report version) column reflects the amount of tax deducted from order proceeds that Amazon will remit to the tax authority.
- If an amount reflected in the Sales Tax Collected column is not fully deducted in the Marketplace Facilitator Tax or Marketplace Withheld Tax column, the difference remains the seller’s responsibility to remit to the appropriate government authority.
- The Tax Collection Model column will display Marketplace Facilitator when Amazon calculated, collected, and remitted sales tax on your order.
- The Tax Responsible Party column will display Amazon when Amazon made the tax calculation.
Does Amazon charge me for Marketplace Tax Collection?
No, Amazon does not charge any fees for Marketplace Tax Collection. Tax calculations for orders to non-marketplace tax collection jurisdictions will continue to use your tax settings and any applicable service fee will still apply to those calculations.
Can I opt out of Marketplace Tax Collection?
No, there currently is no option to opt out.
Can I prevent Amazon from shipping to states or jurisdictions with Marketplace Tax Collection?
No, there currently is no option to restrict sales to specific states for tax reasons.
Who handles a customer tax-only refund request on orders?
Sellers are responsible for refund requests on:
- Merchant Fulfilled Orders where tax was calculated using your tax calculation settings.
- See the How to refund tax help page for additional information.
Amazon Customer Service will handle the refund request for:
- Sales and use tax Amazon automatically calculated, collected, and remitted on your orders.
- All Fulfillment by Amazon (FBA) orders.
- Amazon Tax-Exemption Program
- Marketplace Tax Collection FAQ
- Tax on U.S. Seller Fees FAQ
- Marketplace Withheld Tax
