Updated April 27, 2019
Several states passed Marketplace Facilitator Tax laws in 2017. These set of laws shifted the burden of sales tax collection from individual sellers to marketplace facilitators. What is a marketplace facilitator? Amazon states:
A Marketplace Facilitator is defined as a marketplace that contracts with third party sellers to promote their sale of physical property, digital goods, and services through the marketplace.
Learn more about the states that have passed similar legislation from Amazon’s Marketplace Tax page.
Even though 3rd party sellers won’t have to collect and remit sales tax to the states that have passed similar legislation, they still have to account for what Amazon collects and remits.
This accounting will serve as evidence that sales tax has been received and paid for Amazon sales in those states. You should still consult with your accountant regarding your tax situation even though Amazon collects and remits on your behalf. If you want to see available sales tax services, visit our list of Amazon tools and services.
Here’s how SellerZen handles the Marketplace Facilitator Tax
Even though sellers never receive sales tax collected by Amazon for marketplace taxes, SellerZen still records these transactions to an account.
Since Amazon credits and debits the tax amount on the invoice, SellerZen will do the same thing for documents imported to QuickBooks Online. As a result, the Marketplace Facilitator bank account will always have a balance of $0.00.
Sellers will need to create a Marketplace Facilitator Tax bank account (Type: Bank and Detail Type: Cash on hand) and a service item called Marketplace Facilitator Tax that is linked to the Marketplace Facilitator Bank account.
Sellers can run a report on this bank account to see all transactions with marketplace taxes, or they can export the report and sort to see the amounts for each state.
Why is this important?
Having a record of the marketplace tax transactions is important. With the service item and bank account, QuickBooks Online sales transactions will accurately reflect sales documents on Amazon.
The Wayfair ruling means that more and more states will eventually require marketplaces like Amazon to collect and remit sales tax.
While that’s an additional source of revenue for the states, it means increased costs for marketplace sellers to comply with the new laws. It’s uncertain now whether Amazon will collect and remit for all states for a fee or if sellers will have to seek out services and solutions. The only certainty is that consumers will have to pay more not just because of sales tax, but also because of increased costs born by merchants for compliance.
Need a step-by-step guide to QuickBooks Online accounting for your Amazon orders? Check out our Amazon to QuickBooks Online accounting series: