Why doesn't marketplace facilitation completely eliminate my sales tax compliance obligations?

Marketplace facilitation is a narrow concept. It covers one thing: the collection and remittance obligation on transactions completed through that specific marketplace. Everything outside that transaction scope remains the seller’s problem.

Three things keep compliance obligations alive even when you’re selling through covered marketplaces.

Reason 1: Physical nexus doesn’t care about marketplace collection

Marketplace facilitator laws address who collects tax on marketplace transactions. They have nothing to do with why nexus exists or what registration obligations flow from it.

If Amazon stores your inventory in fulfillment centers in Ohio, Indiana, and Pennsylvania, you have physical nexus in Ohio, Indiana, and Pennsylvania. That physical nexus creates a registration obligation in each state: a permit you’re required to have. Amazon’s collection on your Amazon sales in those states doesn’t change the physical nexus analysis or eliminate the permit requirement.

A seller with FBA inventory in 15 states and no other channel is still obligated to hold sales tax permits in all 15 states, even though Amazon collects 100% of the tax on 100% of those transactions. The permit is the state’s recognition that you have nexus there. The marketplace collection is separate from the permit.

Reason 2: Your other channels are entirely your responsibility

Marketplace facilitation covers the marketplace’s transactions. It has zero reach over anything you sell anywhere else.

A brand selling $2M through Amazon and $500K through their own Shopify store has Amazon handling the Amazon side and nobody handling the Shopify side except them. In every state where they have nexus, they need to collect and remit on the $500K independently, register, configure collection, file, remit.

This extends to every non-marketplace channel: your own website, direct-to-consumer email/phone sales, wholesale to distributors, pop-up shops, B2B contracts. None of these are touched by marketplace facilitation laws.

Reason 3: Marketplace sales count toward your threshold in most states

This is the piece that surprises sellers the most. Even though Amazon is collecting the tax on your Amazon sales, those sales still accumulate toward your economic nexus threshold in most states.

So a seller with $80K in Amazon sales into a state and $30K in Shopify sales into that state has crossed the $100K threshold, triggered by the combined total, even though Amazon handled $80K of it. The Shopify $30K is now taxable, and the seller needs to be registered and collecting on it.

Marketplace collection handles the Amazon side. Threshold-crossing from Amazon sales creates the obligation on the Shopify side. The two things interact, and a seller who monitors only their Shopify revenue for threshold purposes will miss the crossings that Amazon sales are causing.

The one scenario where it actually eliminates most obligations

If a seller sells exclusively through Amazon (or another covered marketplace) with no other channels, and their only nexus is economic (no FBA inventory in any state, no employees, no physical presence), and marketplace sales count toward the threshold but they’re below it in every non-Amazon state, then marketplace facilitation largely covers their exposure.

This describes a very small and shrinking slice of sellers. Most multi-year Amazon sellers have FBA in multiple states (creating physical nexus), and most have at least some direct-channel sales. The “pure marketplace seller with no physical nexus” profile is increasingly rare.

Even that profile requires verification: confirming no FBA inventory exists in any state, confirming no physical presence of any kind, and confirming the threshold status in each state where they sell.

Related: If Amazon already collects sales tax, do I still need to register? | Does Amazon FBA inventory create nexus?