Sales Tax Nexus and Marketplace Facilitator Laws: What eBay Handles for You

Ask ten US eBay sellers whether they have to deal with sales tax and you will get answers from "never, eBay does it" to "I am terrified of nexus". Both are partly right. eBay does calculate, collect and remit sales tax on most of your eBay orders. But that is not the same as sales tax being none of your business, and the reason is a pair of legal ideas that are easy to mix up: nexus, which decides who a state can force to collect tax, and marketplace facilitator laws, which decide who does the collecting when a platform sits in the middle.

This guide explains both, in the order they developed, then shows exactly what eBay's own help page says it handles, what still falls on you (including when you buy from a supplier who ships direct), and how to check your own position state by state. Sales tax is run by states, and the rules differ from state to state, so wherever we give a number we name the state it comes from.

1. Nexus: the connection that lets a state tax a sale

A US state taxes retail sales made inside its borders. The seller normally collects the tax from the buyer and sends it to the state. If the seller does not, the buyer owes a "use tax" at the same rate, but, as the Supreme Court noted in the Wayfair case, compliance with use tax by consumers is notoriously low. That gap is why states fought for the right to make out-of-state sellers collect.

For decades the answer from the courts was no, unless the seller had a physical presence in the state: a store, an office, a warehouse, employees. The Court's syllabus in South Dakota v. Wayfair describes the two cases that set the rule, National Bellas Hess v. Department of Revenue (1967) and Quill Corp. v. North Dakota (1992). A business with no physical presence in a state could not be made to collect that state's sales tax.

Wayfair changes the rule

South Dakota passed a law requiring out-of-state sellers to collect sales tax "as if the seller had a physical presence in the State". By the Court's description, the law covered only sellers that, on an annual basis, delivered more than $100,000 of goods or services into South Dakota or made 200 or more separate transactions for delivery into the state. The case was argued April 17, 2018 and decided June 21, 2018. Justice Kennedy wrote for a 5-4 Court that the physical presence rule of Quill is unsound and incorrect, and Quill and Bellas Hess were overruled.

The Court did not write a national code. It noted that South Dakota's law gave small merchants some protection: it applied only to a merchant doing a considerable amount of business in the state, it was not retroactive, and South Dakota was part of the Streamlined Sales and Use Tax Agreement. That is the origin of "economic nexus": a state can require collection from a remote seller based on how much it sells into the state, not whether it has a building there.

South Dakota's own current wording is a useful illustration of how rules evolve. The state's Department of Revenue says the 200-transaction prong was eliminated effective July 1, 2023, so now only remote sellers with more than $100,000 in gross sales in South Dakota in the previous or current calendar year are covered. Its remote seller bulletin gives a worked timing example: if a seller's gross revenue for sales into the state exceeds $100,000 on May 28, the seller does not have to register and start collecting until July 1. It also says that crossing the threshold in the previous calendar year means licensing and remitting for the following year, and crossing it in the current year means from that point forward.

2. Thresholds differ by state

There is no single national threshold. Each state sets its own, and the way marketplace sales are counted varies too. Here are examples from three state revenue agencies, as published on their own sites (checked October 2026):

Two things stand out. The numbers differ ($100,000 or $500,000). And the same sales can count in one state and not in another: California counts facilitated sales towards its $500,000 test, while Colorado's marketplace publication (revised September 2020) says to leave them out when testing the direct sales threshold. A seller who assumes the rule is the same everywhere will be wrong somewhere.

We have not listed every state. Do not read the table as a complete or typical set. The right habit is to check the revenue department of each state where you have meaningful sales outside eBay.

3. Marketplace facilitator laws: moving the duty to the platform

After Wayfair, many states passed laws that put the duty to collect on the marketplace itself.

California is a clear example because its Department of Tax and Fee Administration (CDTFA) publishes it in detail. Its Marketplace Facilitator Act took effect on October 1, 2019. CDTFA describes a marketplace facilitator as a person that contracts with sellers to facilitate their sales through a marketplace it or a related person operates, for a fee, and that does at least one of several things for the seller: for instance, transmitting offers and acceptances, or owning or operating the buyer-seller infrastructure. It must also do at least one of a second set, such as payment processing, fulfillment, listing products, setting prices or handling customer service and returns. A site that only advertises goods and refers buyers to the seller to complete the sale is not a facilitator.

Under the Act, a seller whose retail sales are all facilitated by a registered facilitator does not need a seller's permit or use tax registration, according to CDTFA. A seller who also makes direct sales to California customers outside a marketplace, or who has physical presence or economic nexus, must register. CDTFA also tells sellers to keep documentation showing the facilitator is responsible, such as an agreement or other proof the facilitator is registered, and to verify the facilitator's permit or account number.

Colorado took the same path from the same date: its Department of Revenue says marketplace sellers are no longer required to collect and remit state sales tax on products sold through a marketplace facilitator, effective October 1, 2019. Its publication adds that a facilitator must collect on all taxable sales made through its marketplace even if the seller would not otherwise be obligated to collect. It also describes limits: marketplace sellers may still be liable if the facilitator's failure to collect resulted from incorrect information the seller supplied.

Texas follows the same idea. The Comptroller says marketplace providers engaged in business in Texas must collect, report and remit state and local sales and use tax on sales through their marketplace, must certify this to their sellers, and that a seller should collect the tax itself until it receives that certification. Marketplace providers and sellers must keep records for at least four years.

Worth remembering: these laws are state laws. They share a pattern, but the definitions, thresholds, documentation and exceptions come from each state. A statement that "marketplace facilitator laws mean you never deal with sales tax" is too broad to be true.

4. What eBay's help page says it handles

eBay's sales tax help page (checked October 2026) states that, based on applicable tax laws, eBay calculates, collects and remits sales tax on behalf of sellers for items shipped to customers in the states and territories listed. It says no action is required of the seller, there are no charges or fees for eBay doing this, and the process applies to all sales whether the seller is located in or outside the United States. It also says sellers cannot opt out of selling items into the listed states or opt out of eBay automatically collecting sales tax.

Where it applies

The page lists 46 states (Alaska through local jurisdictions only), the District of Columbia and Puerto Rico, each with an effective date. The earliest dates on the page are January 1, 2019 (Minnesota and Washington) and the latest is January 1, 2023 (Missouri). Four states do not appear on the list: Delaware, Montana, New Hampshire and Oregon.

Some entries carry state-specific notes. Alaska has no state-level sales tax, but eBay says it is required to collect in certain local jurisdictions that have adopted the Alaska Remote Seller Sales Tax Commission Uniform Code. For Colorado, the page also lists home rule cities where eBay collects. Alabama's entry refers to the state's simplified sellers use tax program at a flat eight percent. Minnesota's entry says that since October 1, 2019 there is no small seller exception and eBay collects on all sales.

What it does not do

• It does not remove your responsibility. The page says sellers must comply with all applicable tax laws, must pay income tax on eBay sales and any tax on eBay fees, and recommends consulting a tax professional. eBay also says it cannot provide tax advice or guarantee that its sales tax features meet all tax requirements.
• It does not cover territories where eBay is not required to collect. For some US territories not on the list, a seller who is required to charge sales tax can set up a tax table, which adds the tax at checkout; the seller is responsible for remitting it.
• It may tax your fees. The page says that depending on state law and the seller's registration address, eBay may collect sales tax or similar taxes on certain selling fees, and that in the US this currently applies to sellers located in Hawaii, South Dakota, Texas and Washington. The taxed fees vary by state and can include store subscriptions, insertion fees and promoted listing fees. Our guide to eBay fees for dropshippers covers each fee.
• It adds some state-specific fees. The page lists recycling and similar fees that eBay collects on certain items, such as mattress recycling fees on mattresses shipped into California, Connecticut and Rhode Island, and tire fees in several states, including California, Florida, North Carolina, Ohio, Virginia and Washington. If you sell regulated goods, read the relevant entries.

5. What still falls to you

Notice that "who handles the tax" and "do I need a state registration" have different answers in different states. Texas expects a Texas-based seller to hold a permit even when all sales run through a marketplace. California does not require a permit for a seller whose retail sales are all facilitated. If you are based in a state whose rules you have not checked, find your own revenue department's marketplace seller guidance before assuming you are exempt from registration.

Your own website or another channel

If you also sell through your own store or website, you are what Colorado's publication calls a multichannel seller. For any sale that a facilitator does not handle, the publication says the seller is subject to the same licensing, collection, remittance, filing and recordkeeping requirements as any other retailer. The state's threshold (for a seller with no place of business in Colorado) is $100,000 of direct sales, in the current and previous year. Illustration, with made-up numbers: a seller makes $70,000 of direct website sales into Colorado and $200,000 through a marketplace. Counting only direct sales, as Colorado instructs, they are below $100,000. Under California's approach, where facilitated sales count towards the $500,000 test, a seller with $180,000 direct plus $350,000 facilitated sales into California totals $530,000 and has crossed it. Check: $180,000 + $350,000 = $530,000. Both are invented figures for the arithmetic only.

Record keeping

Whatever else you do, keep records. Texas says to keep records of marketplace sales for at least four years. California says to keep documentation showing the facilitator is responsible and that CDTFA will not hold a seller liable for tax on a facilitated sale if it can verify that the facilitator collected the correct tax and paid it. Colorado offers a certification form (DR 1290) that a facilitator can provide to a marketplace seller. The same habits help with the income side: eBay's tax invoices and your monthly statements are the evidence. See our guide to eBay seller taxes in the US for income tax and the Form 1099-K.

6. The supplier side: what you owe when you buy to resell

Marketplace facilitator laws cover the sale to your customer. They say nothing about what your supplier charges you. If your supplier is in a state with sales tax and ships goods directly to your customer, the question is whether that purchase is a wholesale (resale) purchase or a taxable retail one.

Washington's Department of Revenue gives a clear example. It describes a drop shipment as a sale where a seller without the item in stock has the vendor ship it directly to the customer. The vendor's sale to the reseller is a wholesale sale, so the vendor generally does not collect retail sales tax. To document it, the vendor must obtain one of three things from the reseller: a Reseller Permit, a Streamlined Sales Tax exemption certificate, or a Multistate Tax Commission (MTC) exemption certificate. If the reseller does not provide a valid permit or approved certificate, the vendor must collect and remit sales tax.

California treats the same structure differently in one respect. Its Publication 121 says that when a California retailer makes a drop shipment to a California consumer on behalf of an out-of-state retailer that holds neither a California seller's permit nor a California certificate of registration for use tax, the California retailer (the drop shipper) is responsible for reporting and paying sales tax on the retail selling price. In other words, the state may look to the supplier, which gives suppliers a reason to ask you for paperwork or to charge tax.

The MTC publishes a uniform resale certificate. Its FAQ says states may change their acceptance policies without notice, that the seller decides whether to accept it, that the state determines whether it is valid, and that the MTC cannot guarantee that any state will accept it. In practice: ask each supplier what documentation they require, supply it, and keep a copy.

The dollars matter. If a supplier charges you sales tax on goods you resell, it is a cost. For the income tax side, see the IRS treatment in our other tax guides; for pricing, build it into the price in a tool like the US eBay fee calculator so it does not come out of your margin. Where a supplier ships from overseas, a different set of charges can apply, covered in our guide to tariffs and cross-border costs.

7. How to check your own position

1. Write down where you sell. List the channels (eBay only, or eBay plus a website) and the states with most of your sales.
2. Read eBay's list. Open the eBay sales tax help page and confirm the states you ship to are covered. Note anything outside the list, including territories.
3. Check your home state. Find your revenue department's guidance for marketplace sellers. Texas and California give opposite answers on whether a marketplace-only seller needs a permit, so do not guess.
4. Count non-eBay sales by state. For each state where you sell directly, compare your direct sales with that state's threshold, and check whether the state counts marketplace sales.
5. Register when you cross a threshold. States give timing rules; South Dakota's published example has a seller crossing the threshold on May 28 and starting on July 1. Use the state's own page.
6. Sort supplier paperwork. Ask each supplier what resale documentation they need and keep their reply.
7. Keep records. Keep eBay's statements, tax invoices and your supplier documentation for the longest period any state asks for. Texas says at least four years.
8. Ask a professional about edge cases. eBay itself recommends consulting a tax professional.

A caution on timing: South Dakota's example is one state's illustration, not a universal rule. Colorado's publication, for instance, tells a multichannel seller to obtain a license and begin collecting by the first day of the first month commencing at least 90 days after its sales exceed the threshold. Always read the rule for the state in question.

8. Common mistakes

• Assuming eBay covers your whole business. It covers eBay orders in the listed places. Your own website, a market stall or an app sale is separate.
• Treating all states alike. Thresholds, counting rules and permit requirements differ, as the Texas, California and Colorado examples show.
• Confusing sales tax with income tax. eBay's collection of sales tax does not report or pay your income tax, and the page says so.
• Ignoring the supplier invoice. A supplier that charges you sales tax on goods you resell usually has not been given a valid resale certificate.
• Skipping the home-state check. Whether you need a permit depends on your state's rules; Texas-based sellers do, according to the Comptroller.
• Relying on a 2019 blog post. Thresholds change: South Dakota dropped its 200-transaction test in 2023.
• Forgetting fee taxes and special fees. eBay may tax some selling fees for sellers in Hawaii, South Dakota, Texas and Washington, and it collects some item-specific recycling fees.

If you want your pricing to carry your real costs, Sellhelm, the eBay dropshipping software this blog belongs to, works out each listing price from eBay's fees and your target return; sales tax rules still need to be checked with your state and a professional. If you are only just setting up, our step-by-step start guide covers the order in which to handle registrations.

Sources and how we checked

Facts in this guide were checked against these official pages in October 2026. Rules and figures change, so confirm anything that affects a decision. This is general information, not legal or tax advice.

• Taxes and import charges, eBay sales tax collection (eBay)
• South Dakota v. Wayfair, Inc., 585 U.S. 162 (2018) (Supreme Court of the United States)
• 2023 Legislative Updates, Sales and Use Tax (South Dakota Department of Revenue)
• Remote Seller Bulletin (South Dakota Department of Revenue)
• Tax Guide for Marketplace Facilitator Act (California Department of Tax and Fee Administration)
• Publication 121, Drop Shipments (California Department of Tax and Fee Administration)
• Sales Tax Information for Online Sellers (Colorado Department of Revenue)
• Sales and Use Tax Topics: Marketplaces, revised September 2020 (Colorado Department of Revenue)
• Marketplace Providers and Marketplace Sellers (Texas Comptroller of Public Accounts)
• Remote Sellers (Texas Comptroller of Public Accounts)
• Drop shipments (Washington Department of Revenue)
• Uniform Sales and Use Tax Certificate FAQ (Multistate Tax Commission)

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