What is the risk of assuming my marketplace is handling all my sales tax?

Marketplace tax collection covers marketplace transactions. It doesn’t cover anything else. The sellers with the most significant unexpected tax liability are often those who assumed Amazon, Etsy, or Walmart handling collection meant they had no further sales tax obligations, and discovered years later that assumption was wrong.

What the marketplace actually handles

When Amazon, Etsy, eBay, or Walmart collects and remits sales tax as a marketplace facilitator, it’s handling exactly this: the tax on transactions that happen through that marketplace’s platform.

That’s the complete scope. Collection on those specific transactions. Nothing more.

What the marketplace doesn’t handle

Your own website or other direct-channel sales

If you sell on Amazon and also have a Shopify store or direct website, every sale through your own channel is your responsibility. Amazon’s collection has no connection to those sales. If you have nexus in a state and you’re making sales through your own channel without collecting tax, you have uncollected tax liability, regardless of what Amazon is doing.

This gap catches multi-channel sellers consistently. Amazon volumes are visible; Shopify volumes are easier to overlook for compliance purposes.

Your registration obligations

Marketplace collection and registration are independent. If you have physical nexus in a state from FBA inventory, you have a registration obligation in that state. If your combined sales across all channels cross an economic nexus threshold, you have a registration obligation. The marketplace being your tax collector doesn’t satisfy those registration requirements.

States can send nexus questionnaires to sellers with apparent in-state activity regardless of marketplace collection status. Receiving one is not filtered by whether a marketplace is collecting on some of your sales.

Physical nexus created by FBA inventory

Storing inventory in an Amazon fulfillment center creates physical nexus in that state. This nexus is yours, it comes from your inventory being physically located there. The fact that Amazon collects tax on Amazon sales doesn’t change that you have nexus obligations in those states for any other sales channels you have.

A seller with FBA inventory in Ohio, Texas, and Pennsylvania has physical nexus in all three states. Amazon handles collection on Amazon-platform sales. But Shopify sales into those same three states are the seller’s responsibility, because the physical nexus exists regardless of Amazon’s collection role.

Threshold monitoring and accumulation

In most states, marketplace-facilitated sales count toward your economic nexus threshold even though the marketplace collects the tax. If your Amazon sales and Shopify sales combined cross a state’s threshold, you’ve crossed, even if no single channel crossed alone. The marketplace collecting tax on its portion doesn’t stop the threshold accumulation.

The pattern that creates liability

The typical situation looks like this:

1. Seller starts on Amazon. Amazon handles all collection, seller treats this as compliance.
2. Seller adds Shopify. Shopify sales grow over time.
3. Amazon moves FBA inventory into several states. Physical nexus expands.
4. Years pass. Shopify sales in FBA-nexus states are uncollected. No returns filed for those states.
5. State sends a nexus questionnaire, triggered by 1099-K data, interstate information sharing, or FBA records.
6. Seller discovers multi-year uncollected liability on Shopify sales in states where FBA created nexus, plus failure-to-register and failure-to-file penalties.

The marketplace collection on Amazon sales doesn’t offset this. The liability is for the sales the marketplace wasn’t handling.

What “fully covered” actually requires

For a multi-channel seller to have clean compliance:

• Amazon handles collection on Amazon sales (marketplace facilitation covers this)
• Own-channel sales (Shopify, website, etc.) configured to collect in all nexus states
• Registered in every state where physical nexus exists, regardless of collection rate
• Economic nexus thresholds tracked across all channels combined
• Returns filed and remittances made in each nexus state for all applicable sales

The marketplace handles one slice. The seller is responsible for the rest.

Related: I haven’t been collecting sales tax — what do I do now? | Why doesn’t marketplace facilitation eliminate my compliance obligations?