If your platform contracts with third-party sellers and processes payment on their behalf, you could be a marketplace facilitator under US state law. That status comes with sales tax obligations that used to sit with the sellers themselves. In the 45 states with statewide sales tax, platforms that meet this definition must collect and remit tax on the transactions they facilitate.

Ecommerce accounted for 16.9% of total US retail sales in the first quarter of 2026, which makes tax compliance a high-stakes issue for platforms. Below, we’ll discuss what makes a business a marketplace facilitator, how collection and remittance work, and the specific compliance risks platforms face when they get any of this wrong.

Key takeaways

• Marketplace facilitator status depends on whether a platform handles both listing and payment for third-party sellers, not just one or the other.

• State laws share a core structure but differ on thresholds, effective dates, and which product categories get special treatment.

• Sellers on a compliant marketplace see their collection burdens drop sharply, but they’re still responsible for direct sales and product classification.

What is a marketplace facilitator?

A marketplace facilitator is a business that contracts with third-party sellers to list and sell their goods or services. It must collect payment for those sales and remit the funds to the third-party seller to be legally classified as a marketplace facilitator.

How do marketplace facilitator laws work?

Once a platform exceeds a state’s economic nexus threshold (typically $100,000 in sales or 200 transactions into that state in a year), it becomes responsible for collecting and remitting sales tax on transactions it facilitates there. That remains true regardless of whether any individual seller would’ve met that threshold on their own.

The platform has to register for a sales tax permit in every state where it’s exceeded the threshold, even if it’s never had a physical presence there. Every transaction needs the correct tax rate and rule set applied, which can vary by product category, buyer location, and sometimes seller location. The platform collects tax directly from the buyer at the point of sale. Returns are filed on whatever cadence the state assigns, and the collected tax is remitted on that schedule. Some states require platforms to report aggregate figures for tax collected back to sellers, either directly or through a year-end tax document.

How do marketplace facilitator laws vary by state?

The core concept is consistent everywhere, but the details differ. Here’s what marketplace facilitators need to get right in each state:

• Economic nexus thresholds: Many states use the standard economic nexus threshold of $100,000 in sales or 200 separate transactions in a calendar year. But some (including California and Texas) use a dollar-only threshold, and others adjust these figures (e.g., New York’s threshold of $500,000 in sales and 100 transactions).

• Product-specific exceptions: A handful of states apply different rules to certain categories when they’re sold through a marketplace. Prepared food and short-term lodging are common examples. For instance, California excludes “delivery network companies” that facilitate delivery services for the sale of local products from the marketplace facilitator tax rules. Georgia, on the other hand, treats meal-ordering platforms as marketplace facilitators and requires them to collect and remit tax once they reach the annual nexus threshold of $100,000 in sales or 200 transactions.

• Isolated or occasional sales: Connecticut and New Mexico don’t require marketplace sellers located in the state to register for sales tax if they make only casual and occasional sales.

What does marketplace facilitator status mean for sellers on platforms?

Sellers on a platform that’s collecting and remitting tax in a given state still have their own obligations. Here’s what you’ll still be responsible for:

• Direct and multichannel sales: Tax law applies at the transaction level, not the seller level. Anything sold through your own site or through a second platform that hasn’t exceeded the threshold in a given state is still yours to manage.

• Accurate product classification: Facilitator statutes typically calculate the platform’s relief from liability based on the seller’s providing correct taxability information. If you incorrectly label the products you’re selling, you—not the platform—can end up responsible for the shortfall in some states.

• Income tax reporting: Sales tax collection by the marketplace has no bearing on income tax. Marketplace sales still count as gross receipts on your federal and state income tax returns.

What risks do platforms face if they get marketplace facilitator compliance wrong?

The main risk of marketplace facilitator compliance is failing to register on time. If a platform exceeds a state’s economic nexus threshold and doesn’t register or start collecting, it becomes liable for the uncollected tax, plus potential penalties and interest. Charging too much tax isn’t a safe option either: that can lead to audits, customer complaints, and refund obligations the platform has to handle after the fact.

Accurate tax classification matters, too. Whether an item is taxable, and at what rate, depends on category and jurisdiction. Sales tax can be a layered combination of state, county, city, and sometimes special district rates, all of which can change. Relying on a single statewide rate isn’t enough, and your system needs to track any changes.

How should a platform evaluate its marketplace facilitator obligations?

Exact marketplace facilitator obligations depend on what’s being sold and where. A platform should be regularly checking which states it’s exceeded the economic threshold in, and its tax calculations should account for product category differences and local jurisdictional rates, not just a single state-level rate. Some states will require marketplaces to issue sellers year-end statements; know which states those are and provide those documents as needed. And keep historical, transaction-level collection records in the event of an audit so you can prove compliance throughout the year.

Stripe Tax is built to help. It monitors transaction volume across states and flags when a platform is approaching or has exceeded an economic nexus threshold, calculates tax by product category and jurisdiction down to the local level, and applies updated rates automatically. It can also collect the correct tax across every US state where a platform facilitates sales, without requiring the platform to build its own jurisdiction-by-jurisdiction logic, and it generates the transaction-level records needed for filing or responding to an audit.

How Stripe Tax can help

Stripe Tax reduces the complexity of tax compliance so you can focus on growing your business. Stripe Tax helps you monitor your obligations and alerts you when you exceed a sales tax registration threshold based on your Stripe transactions. In addition, it automatically calculates and collects sales tax, value-added tax (VAT), and goods and services tax (GST) on both physical and digital goods and services—in all US states and in more than 100 countries.

Start collecting taxes globally by adding a single line of code to your existing integration, clicking a button in the Dashboard, or using our powerful application programming interface (API).

Stripe Tax can help you:

• Understand where to register and collect taxes: See where you need to collect taxes based on your Stripe transactions. After you register, switch on tax collection in a new state or country in seconds. You can start collecting taxes by adding one line of code to your existing Stripe integration or add tax collection with the click of a button in the Stripe Dashboard.

• Register to pay tax: Let Stripe manage your global tax registrations and benefit from a simplified process that prefills application details—saving you time and simplifying compliance with local regulations.

• Automatically collect tax: Stripe Tax calculates and collects the right amount of tax owed, no matter what or where you sell. It supports hundreds of products and services and is up-to-date on tax rules and rate changes.

• Simplify filing: Stripe Tax seamlessly integrates with filing partners, so your global filings are accurate and timely. Let our partners manage your filings so you can focus on growing your business.

Learn more about Stripe Tax, or get started today.