Marketplace Sales Tax: What Amazon and Walmart Collect for You (and What They Don't)

If you started selling after about 2019, you may have never thought hard about sales tax — and that's by design. After the Supreme Court's 2018 Wayfair decision, states passed marketplace facilitator laws that put the collection job on Amazon and Walmart, not on you. For most marketplace orders, the platform now calculates, collects, and remits sales tax automatically. But 'mostly handled' is not 'fully handled,' and the gaps are where sellers get a nasty surprise. Here's the operator's version of what's covered and what's still your problem.

What Wayfair changed, in plain terms

Before 2018, a state could generally only force you to collect its sales tax if you had a physical presence there — an office, a warehouse, an employee. The Wayfair ruling threw that out and allowed states to require collection based on economic nexus: cross a sales or transaction threshold in a state (commonly defined in revenue and/or order count over a year) and you can owe tax there even with zero physical footprint.

On its own, that would have been a nightmare — thousands of jurisdictions aimed at individual sellers. So states followed up with marketplace facilitator laws that shifted the burden to the platform. Today, in essentially every state that charges sales tax, the marketplace is legally the one collecting on facilitated sales.

What Amazon and Walmart collect automatically

For orders placed through their checkout, both platforms now handle the heavy lifting. That means they:

• Calculate the right rate for the buyer's shipping address, including state, county, and local district taxes.
• Collect the tax from the customer at checkout — it's added on top of your price, not taken out of it.
• Remit it to the state on your behalf and file under the marketplace's registration.
• Report it so the tax on facilitated sales generally isn't something you separately file in those states.

The practical upshot: the sales tax line in your reports is pass-through money. It was never your revenue and it's not your expense — it belongs to the state and the platform moves it there. When you reconcile your P&L, strip it out entirely. Treating collected tax as income is one of the fastest ways to badly overstate how well your business is doing.

The gaps that are still on you

Here's where sellers get burned by assuming the platform covers everything. It doesn't cover:

1. Sales off the marketplace. If you also sell on your own Shopify store, at trade shows, or wholesale direct, the facilitator laws don't apply to those channels. You may have your own economic nexus and your own collection obligation there.
2. Income and franchise tax. Facilitator rules cover *sales* tax only. Your business still owes income tax, and holding inventory in a state (including a fulfillment center) can create income- or franchise-tax nexus no platform handles for you.
3. Registration you may still need. A few states have wanted marketplace sellers to register or file an informational return even when the platform remits the actual tax. The details shift over time and by state, so this is a 'confirm, don't assume' item.
4. Historical exposure. If you sold in the gap years before a state's facilitator law took effect — or off-platform the whole time — back taxes can still be owed. New ownership inheriting a seller account inherits this too.

Inventory placement quietly creates obligations

This is the trap most FBA sellers miss. When you ship inventory into the fulfillment network, the platform can distribute it across warehouses in many states. Physical inventory sitting in a state can, depending on that state's rules, create nexus for taxes the facilitator law does not cover — chiefly income and franchise tax. You didn't choose those locations, but the inventory is still yours. If you use any program that spreads stock widely, know which states it touches so nothing surprises you at filing time.

How this should show up in your books

Clean bookkeeping here is mostly about not double-counting and not mistaking tax for profit:

• Exclude marketplace-collected tax from revenue. Your true top line is product sales, not sales plus the tax the platform passed through.
• Reconcile settlements to the order data, so collected-and-remitted tax nets to zero in your P&L rather than floating as phantom income or expense.
• Track your off-marketplace channels separately — that's where a real, unhandled collection obligation can hide.
• Watch your nexus footprint as you grow; thresholds and inventory placement change as volume scales.

Frequently asked questions

Do I still need a sales tax permit if Amazon collects for me?

For purely facilitated marketplace sales, the platform registers and remits, so in most states you don't separately register just for those orders. But if you sell on other channels, or a specific state still wants marketplace sellers to register or file an informational return, you may need a permit. And sales tax is a separate question from income tax, which you still owe. When in doubt, confirm with a sales-tax professional rather than assuming the marketplace covers it all.

Is the sales tax the marketplace collects part of my revenue?

No. It's collected from the customer on top of your price and remitted to the state — it never belongs to you. Counting it as revenue overstates both your sales and your apparent margin, so strip it out when you reconcile your numbers.

Can FBA inventory in another state create a tax obligation?

It can. Marketplace facilitator laws handle sales tax on facilitated orders, but they don't cover income or franchise tax. Inventory physically stored in a state can create nexus for those taxes depending on the state's rules, even though you didn't choose the warehouse location.