Marketplace Facilitator
marketplace facilitator Another complex topic for discussion is the marketplace facilitator ruling and sales tax treatment, which can be rather confusing.
Amazon is a major example of a marketplace facilitator that is responsible for collecting and remitting your sales tax in the US. This means that you don't have to register in any state or worry about dealing with complicated tax returns.
In certain situations, such as in states that require businesses to register for sales tax if they have a business
connection (Such as incorporating your company in that state), or nexus, in that state, you may be required to file a zero return in that specific state if you meet the criteria mentioned above.
SALES TAX LIABILITY
Some states may have specific requirements for marketplace facilitator sellers. For example, in New York, sellers need to obtain form ST 150 Marketplace Provider Certificate of Collection from their marketplace facilitator. This form certifies that the marketplace provider, not the marketplace seller, will collect and remit sales tax on the sales it facilitates. It also allows the seller, if necessary, to explain to the Tax Department why it did not collect and remit sales tax on its marketplace sales. For more information, please refer to TSB-M-19(2)S, Sales Tax Collection Requirement for Marketplace Providers.
Shopify is not classified as a marketplace facilitator. The platform provides each user with a custom website for selling and managing customers. If a user meets the economic threshold, Shopify will notify them to register for a permit number in their state. Once registered, Shopify will start collecting taxes, but the owner of the site is responsible for remitting sales tax to each applicable state.
For cases such as Shopify and not keeping up with compliance, it can lead to lengthy and painstaking processes to catch up on all the sales tax compliance issues that are awaiting urgent action but have been ignored.
It is essential to understand the evolving business landscape and the tax implications on your business activities.
When it comes to sales tax, every detail matters.
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