Marketplace Facilitator/Seller FAQs
Table of Contents
What is Economic Nexus?
- Economic nexus laws apply to any business that makes sales into states in which they have no physical presence but meet the state’s sales and/or transactions thresholds.
What is a Marketplace?
- A Marketplace is any physical or electronic presence, including but not limited to a store, booth, Internet website, catalog, television or radio broadcast, or a dedicated sales software application, where a marketplace seller sells or offers for sale tangible personal property.
- Examples: Platforms such as Amazon, eBay, Auction Houses, Tradeshows / Conventions.
What is a Marketplace Facilitator?
A Marketplace Facilitator generally includes businesses that facilitate retail sales by providing:
- Infrastructure (i.e. listing the product on the Marketplace, communicating offer acceptance of a retail sale, providing the physical or electronic Marketplace, etc.) or
- Support (i.e. customer service, fulfillment or storage services, etc.) for retail sales to occur; AND collecting the sales price, processing payments, or receiving compensations from the retail sale.
- For a full definition, see NRS 372.748. (You or your business facilitate sales on behalf of other sellers and collect and remit the sales tax on their behalf.)
Marketplace Facilitators include, but are not limited to:
- Consignment stores.
- Auctions.
- Food delivery services (i.e., “Uber Eats”).
- Online Marketplaces (i.e., Amazon, eBay).
The tax form can be found in Sales & Use, or click here:
Marketplace Facilitator Certificate of Collection (PDF)
What is a Marketplace Seller?
- A person who has an agreement with a Marketplace Facilitator and makes retail sales of tangible merchandise through a Marketplace owned, operated, or controlled by a Marketplace Facilitator.
- A Marketplace Seller can also be a Remote Seller, if they make direct sales into Nevada in addition to those made through a Marketplace.
- Example: You are a seller that sells through a Marketplace such as Amazon, eBay, Auctions, Tradeshows / Conventions, Uber Eats, etc.
- As per NRS 372.749.
What is a Remote Seller?
- A “Remote Seller” is a seller that does not have a physical presence or that had no other legal requirement to register and collect the applicable sales or use taxes in the state.
- The United States Supreme Court ruled in South Dakota v. Wayfair on June 21, 2018, that states can require Remote Sellers to collect and remit the applicable sales or use tax on sales delivered to locations within their state – regardless of whether the seller has a physical presence in the state.
- Consistent with the Wayfair decision, Nevada has adopted regulations that establish requirements for Remote Sellers that make sales into Nevada effective 10/1/18.
- A Remote Seller can also be a Marketplace Seller if, in addition to their direct sales into Nevada, they also sell merchandise through a Marketplace.
For more information, please see the Wayfair Decision
When does a Marketplace Facilitator or Marketplace Seller establish economic nexus?
- In order to establish economic nexus, Marketplace Facilitators, Marketplace Sellers, or Remote Sellers must add up all their sales in Nevada, both directly to customers and through online marketplaces, to see if they hit a sales threshold.
- From October 1, 2019, if total sales exceed $100,000 or if there are more than 200 separate transactions in Nevada during the previous or current calendar year, Marketplace Facilitators, Marketplace Sellers, or Remote Sellers must collect and submit sales tax on all their Nevada sales.
- This follows Nevada’s adoption of the rules for Remote Sellers on October 1, 2018, after the South Dakota v. Wayfair decision.
- A seller that reaches this threshold must register by the first day of the month, at least 30 days after exceeding the threshold.
- The seller must start collecting sales tax from that date forward, without needing to collect tax on sales before reaching the threshold.
- Example: If a seller surpassed the threshold on October 1, 2024, they need to register and collect sales tax starting November 1, 2024.
How is a Remote Seller different from an In-State Seller?
- In-State Sellers differ from Remote Sellers because they have a physical presence in Nevada.
- This includes stores, offices, warehouses, employees in the state, or inventory.
- These businesses must register and handle sales tax on all their sales, no matter how much they sell.
- However, if you’re a Remote Seller selling only through a Facilitator that already collects Nevada sales tax, and your only connection to Nevada is inventory in a third-party’s fulfillment center, you don’t need to register for a Sales Tax Permit with the Department.
What are “direct sales”?
- Direct sales are any sales made by the seller directly to Nevada consumers.
- These “sales” do not include Nevada retail sales made through a Marketplace Facilitator.
Who is required to register for Nevada sales and use tax?
- Anyone selling physical goods in Nevada, including Marketplace Facilitators, Sellers with a physical location or significant sales in the state, and out-of-state businesses using local fulfillment centers, must register for Nevada sales and use tax with the Nevada Department of Taxation.
- However, Remote Sellers using a Marketplace Facilitator who collects Nevada sales tax do not need to register if their only link to Nevada is their inventory in a local third-party fulfillment center.
How does a Facilitator or Seller know if they need to file for a sales tax obligation?
- Marketplace Facilitators, Marketplace Sellers, or Remote Sellers should calculate their total sales in Nevada for the previous and current year, up to the assessment date.
- If your sales exceed $100,000, or reach 200 transactions in any year, you need to register and start collecting sales tax.
When must a Facilitator or Seller register to collect Nevada sales tax?
- You register to collect sales tax on the first day of the first calendar month, at least 30 days after you meet or exceed Nevada’s sales threshold.
- You should continue collecting the tax through the end of that calendar year and all of the next year.
- If you don’t meet the threshold in the second year, you don’t need to collect tax in the third year, but still must file a return to report sales.
- For example, if a seller exceeds the sales threshold on June 10th, they must start collecting sales tax by August 1st. They’ll collect tax for the rest of that year and the entire following year.
- If sales fall below the threshold in the second year, you do not need to collect tax in the third year, but you must still report the sales.
- If you meet or exceed the threshold at any time in the third year, you must start collecting tax again on the first day of the first calendar month, at least 30 days after reaching the threshold.
Does a Marketplace Facilitator need to file separate sales tax returns for their own sales and the sales they facilitate for others?
- Yes, a Marketplace Facilitator must file one return for their direct sales under one location and another return for sales facilitated on behalf of Marketplace Sellers under a different location number.
- These two locations cannot be consolidated.
- Example: if a facilitator sells their products from Location A and facilitates sales for others from Location B, they must file two separate tax returns—one for each location’s sales.
Does a Marketplace Seller without a physical presence in Nevada need a Nevada Sales Tax permit if they exceed the sales threshold but sell only through registered Marketplace Facilitators?
- No, if all the Marketplace Facilitators used by the seller are registered to collect and remit Nevada sales tax, the seller does not need to register with the Department of Taxation.
- Example: if a seller uses a facilitator like Amazon, which is registered to handle Nevada sales tax, and doesn’t store inventory or have any other physical presence in Nevada, they don’t need their own sales tax permit.
What if a Marketplace Seller also makes direct sales into Nevada?
- If the seller makes direct sales into Nevada, in addition to sales through registered Facilitators, and these combined sales meet Nevada’s threshold, they must register to collect and remit sales tax on all direct sales into Nevada.
- Example: if a seller uses Amazon to facilitate sales but also sells directly to Nevada customers through their website, reaching the sales threshold, they must register and handle sales tax for those direct sales.
Can a seller get documentation to show they aren’t responsible for collecting Nevada sales tax if they sell through a Marketplace Facilitator?
- Yes, the Marketplace Facilitator should provide a certificate, as specified by the Department, to Marketplace Sellers.
- This document confirms that the Facilitator will handle registration, collection, remittance, and reporting of all Nevada sales tax for sales made through their platform.
- They are also accountable for audits on these sales.
- Example: if a seller lists products on a platform like eBay, and eBay is registered to manage Nevada sales tax, eBay should give the seller a certificate stating this responsibility. This ensures the seller knows they are not responsible for Nevada sales tax on sales made through eBay.
What happens if a Marketplace Facilitator does not reach the Nevada sales threshold?
- If a Marketplace Facilitator falls below the Nevada sales threshold, they are not required to register for collecting Nevada sales tax.
- They must inform the Marketplace Seller about this situation, so the seller can register to collect Nevada sales tax if their sales individually meet or exceed the threshold.
- Example: if a platform such as Etsy doesn’t meet the Nevada sales threshold, it must notify its sellers. Then, sellers who individually exceeds the threshold must register and take responsibility for collecting Nevada sales tax on their sales.
What should a Marketplace Facilitator do if they also sell their own products through their marketplace platform?
- When registering, they should select the “Marketplace Facilitator” option, which registers them for two different locations.
- For the first location, they’ll report all their direct sales, including those from their storefront, website, or their own marketplace.
- If there are no direct sales, they should file a zero return.
- The second location is for reporting all sales they facilitate for other Marketplace Sellers on their platform.
- Example: if someone runs a platform like Shopify, and also sells their own products on it, they would report their personal sales under one location. If they handle sales for other sellers on Shopify, those transactions are reported under a second location.
Can Marketplace Facilitators choose not to collect Nevada sales tax for the sellers they work with?
- No, Marketplace Facilitators are required to collect, remit, and report Nevada sales tax on behalf of Marketplace Sellers according to NRS 372.752 sections 1(a) and (b).
- They can only avoid liability for any underpayment discovered in an audit if they can prove two things:
- First, that they made a reasonable effort to obtain accurate sales information from the seller;
- Second, that any mistakes in collecting the correct amount of sales tax were due to incorrect information given to them by the Marketplace Seller.
- Example: if an audit finds that too little sales tax was paid on sales made through a platform like eBay, eBay would be responsible for the shortfall unless they can show they tried to get the right information from the seller and the error happened because the seller provided wrong information.
Is a Marketplace Facilitator allowed to deduct bad debt on a sale made for a Marketplace Seller?
- Yes, a Marketplace Facilitator can deduct bad debts from sales made on behalf of a Marketplace Seller if they handle the Nevada sales or use tax and qualify for the deduction according to Nevada law and federal tax rules.
- This deduction is claimed on their Nevada tax return for the time the debt was considered uncollectible and if it is also allowed as a deduction on their federal taxes.
- Example: if a Marketplace Facilitator like Etsy collects and pays the sales tax for a seller’s transaction that later becomes uncollectible, Etsy can claim a bad debt deduction. This is possible if the loss is recorded in Etsy’s or the seller’s financial records and is eligible for deduction on their federal tax return.
Is a Marketplace Seller required to file a Nevada Sales Tax return if a Marketplace Facilitator manages their sales tax?
- Marketplace Sellers with a presence in Nevada are required to register, collect, remit and report the sales tax from all its Nevada sales on a Nevada sales tax return.
- They will report any direct sales that are not sold through a Marketplace and omit the sales that are reported by the Marketplace Facilitator.
- If all sales are made through a Marketplace Facilitator, they will file a zero return.
- If a Marketplace Seller has NO physical presence in Nevada and ONLY sells through a Marketplace Facilitator that is registered to collect, remit and report the sales tax on the sellers’ behalf, the Marketplace Seller does not need to register with the Department or file a Nevada sales tax return.
- Example: A Nevada-based seller using Etsy for sales must file a tax return for direct sales outside Etsy. If all their sales are through Etsy, they submit a zero return. However, a seller outside Nevada only selling on Etsy does not have to file a Nevada sales tax return.
What if I paid the sales tax on my return in addition to the Marketplace Facilitator for the same sales?
- If you self-calculated and remitted sales tax to the Department that was already collected and remitted by the Marketplace Facilitator, you may amend your return.
- You will need to include the following information and mail it to the Carson City address.
- Copy the Sales/Use Tax return for the period (month/quarter) in which sales/use tax was originally paid.
- Write “AMENDED” in black, in the upper right-hand corner of the tax return.
- Line-through original figures for each county in which tax was originally reported, in black, leaving original figures legible.
- Enter corrected figures, in black next to lined through figures.
- Indicate amount of credit claimed.
- Include a written explanation.
- Include a copy of the “Certificate of Collection” provided by the Marketplace Facilitator(s) that you use to facilitate your sales.
- Include copy of report/invoice/document that shows sales tax was collected by the facilitator on the sales you are amending.
- Indicate whether a refund is requested or whether a credit will be used to meet current/future tax liability.
Note: FAQs are for general guidance only. For written advice as it relates to your business, request an advisory opinion from the Department.