Marketplace Seller Compliance: Amazon, Etsy, Shopify Sales Tax 2026

What the Law Actually Shifts

For example, like most states, New York puts the sales tax collection and remittance onus on the marketplace. However, it's critical for the marketplace seller to receive the appropriate paperwork from the marketplace to be off the hook from a legal perspective. Specifically, a properly received Form ST-150, Marketplace Provider Certificate of Collection (or a publicly posted marketplace-provider collection agreement containing New York's required statement), is what relieves the seller's duty to collect and remit tax on that sale. Absent that form, there is some technical risk of being held liable for sales tax under a state sales tax audit.

Like NY, Illinois has a similar documentation requirement to excuse sales tax collection. In Illinois, a seller must receive a valid Form CRT-63 to avoid collection responsibility. Although it is not required to be filed with the state, it must be retained by the seller in case of an audit. For background on how these marketplace obligations work more broadly, our guide to marketplace facilitator reporting covers the mechanics in more depth.

Most states follow this same general framework. If the platform qualifies as a marketplace, it is treated as the seller and must handle the sales tax obligations of the merchants. On the actual sellers' side, they are also liable for the sales tax absent receiving proof tax was remitted by the marketplace or a form authorized by the state. As both sides are technically liable, it is possible for states to attempt to collect the sales tax twice on the same transaction, though the certificate and documentation requirements exist specifically to prevent that from happening when they are properly handled.

Sellers often have both marketplace and non-marketplace sales. In that instance, the seller reports only its non-marketplace sales, such as website direct sales, on Form ST-1. Marketplace sales are generally excluded from the return requirements in most states. However, it's worth checking your state's specific rules if you sell both on the marketplace and on your site directly.

What Marketplace Collection Does Not Cover

The largest gap is with direct sales. If you sell through your own branded Shopify store, Shopify is not acting as a marketplace facilitator for that storefront. Shopify's own tax guidance puts the responsibility back on the merchant, and most sellers don't have Shopify's automated filing service turned on. Platforms like Amazon and Etsy play a collection role for their marketplaces, and Shopify's role is more like a tool to help with calculations. We commonly encounter clients that thought Shopify was handling everything only to encounter a huge sales tax liability under audit.

Registration is the second gap. New York's guidance explains that a home-based seller of handmade goods that sells through a marketplace, still has to obtain a Certificate of Authority and file periodic returns, even if the marketplace is collecting sales tax. Most states have a similar requirement to ensure the seller is handling its compliance properly.

The third gap is with income tax nexus. Most of these laws deal with sales tax nexus. However, other laws deal with corporate income and franchise tax. In most cases, having a sales tax collection requirement can often trigger income or franchise tax compliance as well.

Where This Goes Wrong

The biggest issue I see is sellers assuming that because Amazon (or another marketplace) is collecting and remitting on their behalf, that sellers do not need to worry about anything else. A seller running Amazon, Etsy, and a personal Shopify store, for example, can be fully compliant on the former two, and completely exposed on the latter because that third marketplace was never a facilitating marketplace.

Another common issue is assuming registration is optional once a marketplace is remitting on a seller's behalf. In New York, for example, sellers still are obligated to register, and failing to do so does not negate exposure. We have also seen situations in California in which many marketplaces have been consistently collecting for a long period of time, while others have not. Having different rules and collection periods for different marketplaces creates another layer of complexity.

Sellers who make these mistakes will not hear from the state to clarify their status. No, sellers will find out from a notice of assessment, a nexus questionnaire, or an audit letter (after the fact) and possible penalties and interest will be added to the assessment.

If you are running sales across multiple platforms, it is prudent to get the channel by channel picture in writing, before a state does it for you. Our legal, CPA and former state audit team does exactly this, and if a gap has already turned into exposure, our voluntary disclosure agreement services are often the fastest way to resolve it before the state does.

Frequently Asked Questions

Does a marketplace facilitator law mean I never have to deal with sales tax again?

It means a marketplace handles collection and remittance for the sale it facilitates. You are still responsible for sales you make yourself, and possibly registration in some states.

If Amazon collects tax on my sales, do I still need to register in that state?

Yes, in some states. The NY guidance states a seller using only a marketplace still needs a COA and must file periodic reports even if the marketplace collected the tax.

Is my Shopify store covered the same way as my Amazon listings?

No. According to Shopify's tax guide, you are responsible for collecting, filing and remitting taxes on your store, unless you use their automated filing service.

Does marketplace facilitator collection affect my income tax obligations?

No, marketplace facilitator collection laws only impact sales tax. How a state establishes a seller's income tax and/or franchise tax nexus is separate from sales tax.

How do I report marketplace sales on my sales tax return?

States vary on this. Illinois tells sellers to not include marketplace collected sales in their total receipts and to deduct them out. See your state's return instructions before filing to be sure.

What should I do if I sell on multiple platforms with different tax treatments?

Map each channel. Which ones collect for you? Which ones don't? Where are you registered? Inconsistent treatment across channels is where most exposure is.

Can a state still audit me if a marketplace was collecting the tax?

Yes. States audit sellers to check registration status, confirm direct sales are reported, and check whether the tax was collected. They look at all channels, including the marketplace channel.

This article is for general information only and does not constitute legal or tax advice. Rules for marketplace facilitators change and vary by state. Speak with a qualified professional for your specific situation before making decisions around compliance.

About the Author

Gerald J. "Jerry" Donnini II is a sales tax attorney and the founder of Sales Tax Helper, a national platform that helps businesses find, fix, and prevent sales tax exposure before it becomes a problem. Over a 15-year career, he has represented businesses in more than 5,000 sales tax audits, appeals, and disputes across 40+ states. He holds an LLM in Taxation from New York University, is co-author of a CCH treatise on state sales and use tax, and serves as an adjunct law professor. Jerry has saved businesses more than $500 million in sales tax assessments. His framework, Find It. Fix It. Defend It., guides businesses from initial nexus diagnosis through voluntary disclosure and, when necessary, full audit defense.