Marketplace facilitators

Marketplace facilitator definition

A marketplace facilitator is a business that does the following three activities: (RCW 82.08.010(15)):

1. Contracts with sellers to facilitate the sale of a marketplace seller’s product through a marketplace for consideration.

2. Engages, directly or indirectly, in transmitting or otherwise communicating the offer or acceptance between the buyer and seller. This does not include merely advertising.

3. Does any of the following activities, directly or indirectly, 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.
Taking orders.
Providing customer service.
Accepting or assisting with returns or exchanges.

If you have questions about whether you qualify as a marketplace facilitator, you may request a binding tax ruling.

Lodging exception

A business is not a marketplace facilitator if they:

Provide travel agency services or operate a marketplace providing travel agency services.
Enable consumers to purchase lodging in a hotel or similar facility, for a period less than 30 days. The lodging provided cannot be a home, apartment, cabin, or other residential dwelling.

Registration requirements

Marketplace facilitators making sales to Washington consumers (including sales made on behalf of marketplace sellers) are required to register if they:

Have more than $100,000 in combined gross receipts sourced or attributed to Washington.
Have physical presence nexus.
Have marketplace sellers with physical presence in Washington.
Are organized or commercially domiciled in Washington.

Monthly report to marketplace sellers

Beginning July 1, 2019, marketplace facilitators must provide each of their marketplace sellers with access to information regarding gross Washington sales made on their behalf during the previous month. Facilitators must send this report to sellers by the 15^th of each month.

If you do not provide the required notice to sellers by the due date, you will not be eligible for liability relief.

Liability relief for marketplace facilitators

There are two types of liability relief for marketplace facilitators (RCW 82.08.0531).

Type 1: Liability relief—incorrect collection amount

A marketplace facilitator is relieved of liability to the extent of the error for not collecting the correct amount of tax only if they meet all of the following criteria:

Fully comply with the monthly report requirement.
Can show that the error was due to incorrect information given to the facilitator by the seller.
Are not affiliated with the seller.

Note: If a facilitator is relieved of liability, the marketplace seller is solely liable for the amount of uncollected tax.

Type 2: Liability relief—failure to collect tax on taxable sales

A marketplace facilitator is provided some liability relief for not collecting tax on taxable sales through their marketplace only if they meet all of the following criteria:

Fully comply with the monthly report requirement.
Make the taxable retail sale solely as an agent of a marketplace seller.
Are not affiliated with the marketplace seller.
Can show that the error was not a sourcing error under RCW 82.32.730.

Calendar year	Type 2 liability relief amounts
2018	Relief cannot exceed 10% of the total tax due on facilitated sales into Washington during 2018.
2019	Relief cannot exceed 5% of the total tax due on facilitated sales into Washington during 2019.
2020 and after	Relief is no longer available

Reporting

You should report sales/use tax collected on behalf of marketplace sellers using our secure online portal My DOR.

Report your gross Washington retail sales under Retailing B&O.
On the Deduction list, select Other, and enter your marketplace sellers’ total Washington sales.
In the Explanation field, enter Third-Party Sales.
Report your gross Washington retail sales on behalf of marketplace sellers under State Sales and Use.
On the Local Sales page, enter the sales by location.

Note: Sales tax is calculated based on the location where the sale is sourced or delivered. Use the department’s sales and use tax tools to calculate the correct rate. To determine whether a product is subject to Washington sales tax use the taxability matrix.

Reporting commissions

Marketplace facilitators generally earn commissions from marketplace sellers when facilitating a sale. If a marketplace facilitator has economic nexus 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.