Understanding Marketplace Facilitator Taxes
Marketplace Facilitator legislation is a set of laws that shifts the sales tax collection and remittance obligations from a third party seller to the marketplace facilitator. This means the tax obligation for the marketplaces falls on the platform and not the seller. This is the case for Amazon FBA, eBay, Etsy and Walmart sellers.
What occurs when a sale happens in these marketplaces if it is sent to a state where the marketplace is responsible, is that the tax comes along with the order but is later taken out through fees.
Below is a link to each marketplace and how facilitator taxes are applied to them.
The easiest way to manage the facilitator tax is to ignore them on the initial order. This is for two reasons. First, the seller isn’t the entity responsible for the taxes. Second, if the tax is recorded on the sale and later taken out as a fee, it is hard to reconcile because in sales tax, payable can not be used to pay the marketplace fee when the marketplace takes the taxes back.
Set Up for Marketplace Facilitator Taxes in Webgility
This solution only works if you have set Webgility to apply sales tax as a line item. Otherwise, QuickBooks will try to recalculate and add the taxes back into the transaction.
1. First, check the above link for the marketplace you are working with. Be sure to make note of the states where the facilitator taxes will be handled by the marketplace. If you are adding a new marketplace connection, the below settings will be applied to the new channel automatically.
2. Then, in Webgility go to Integrations > Stores > Settings.
3. In Settings, select “Do not download tax for states and the drop-down next to the option will become available.
4. Click the drop-down and check the boxes next to all the states where the marketplace is collecting the facilitator taxes.
5. Once this is done click Save & Continue.
6. Making this change accomplishes two things:
Taxes will be removed from orders where the shipping destination is managed by a facilitator tax.
Fees related to facilitator taxes in those same states will also be ignored.