NOTE: New requirements for registration and retail sales/use tax collection effective October 1, 2018.
What is a marketplace facilitator?
A marketplace facilitator is a business that does the following three activities: (RCW 82.13.010(3)):
1. Facilitates the sale of a marketplace seller’s product through a marketplace for payment.
2. Engages, directly or indirectly, in any of the following with respect to bringing the buyer and seller together:
- Transmitting or otherwise communicating the offer or acceptance between the buyer and seller
- Owning or operating the infrastructure, electronic or physical, or technology that brings buyers and sellers together
- Providing a virtual currency that buyers can use to purchase products from the seller
- Engaging in software development or research and development activities related to any activities with respect to the seller’s products listed below, if such activities are directly related to a marketplace operated by the person or an affiliated person.
3. Does any of the following activities with respect to the seller's products:
- Payment processing services
- Fulfillment or storage services
- Listing products for sale
- Setting prices
- Branding sales as those of the marketplace facilitator
- Order taking
- Advertising or promotion
- Providing customer service or accepting or assisting with returns or exchanges
A marketplace facilitator facilitates sales of a seller’s products through a marketplace and engages in other specified activities as provided by the law and outlined above. Websites that merely advertise goods for sale and do not handle transactions do not meet the definition of a marketplace facilitator.
If you have questions about whether you qualify as a marketplace facilitator, you may request a binding tax ruling.
Sales to Washington consumers
Marketplace facilitators making sales to Washington consumers (including sales made on behalf of marketplace sellers) are required to register and follow tax collection laws if you meet either of two thresholds.
|Annual retail sales to WA||Annual transactions to WA||Action|
|Less than $10,000||199 or less||You do not need to register or collect tax*|
|Less than $10,000||200 or more||You must register, collect, and submit retail sales tax|
|$10,000–$100,000||199 or less||
You must choose: register, collect, and submit retail sales tax;
follow use tax notice and reporting guidelines**
|$10,000–$100,000||200 or more||You must register, collect, and submit retail sales tax|
|$100,000.01 or more||199 or less||You must register, collect, and submit retail sales tax|
|$100,000.01 or more||200 or more||You must register, collect, and submit retail sales tax|
*This assumes that you do not have a physical presence in Washington.
** Marketplace facilitators must collect/submit sales tax on behalf of marketplace sellers with a physical presence in Washington.
When determining if a facilitator meets either threshold, the total retail sales for the facilitator include:
- Their own retail sales; and
The retail sales of all their marketplace sellers.
Reporting sales/use tax
You should report sales/use tax collected on behalf of marketplace sellers using our secure online portal My DOR. You will report the tax collected for marketplace sellers under a different Unified Business Identification number than the one you use to report your own sales.
- Report your Washington sales of your marketplace sellers under the retailing Business and Occupation (B&O) tax classification and claim a deduction for “Other” for these sales. The explanation for the “Other” deduction should be “Third-Party Sales.” Note that marketplace facilitators do not owe retailing B&O tax on these sales – see below for more information on B&O tax reporting.
- Report the state portion of the sales tax under the retail sales tax classification and the local portion under the local sales tax classification. The delivery location determines the sales tax rate and four-digit location code used to report local sales. The Department of Revenue has information and tools to help businesses determine the correct sales tax rate.
Marketplace facilitators generally earn commissions from marketplace sellers when facilitating a sale. If a marketplace facilitator has economic nexus (B&O) with Washington, its commission income is subject to B&O tax under the Service and Other Activities classification for facilitated sales that are delivered or sourced to Washington.
For more information, see Apportionment for businesses in Washington.
If you have questions regarding your tax reporting requirements, email DORMarketplaceFairness@dor.wa.gov or call 1-800-426-1776.