Rules for Texas Marketplace Sellers and Marketplace Providers
In Texas, a “marketplace” is defined as any physical or electronic platform where individuals or businesses—other than the platform owner or operator—sell taxable items. This definition includes stores, websites, software applications, and catalogs. While the term can apply broadly, it most commonly refers to third-party platforms like Amazon, eBay, and Etsy, where sellers list their products.
The businesses that own and manage these platforms are called marketplace providers, defined as entities that own or operate a marketplace and directly or indirectly process sales or payments for sellers.
Businesses or individuals who sell their products through these platforms are known as marketplace sellers, meaning any seller—other than the marketplace provider—who makes taxable sales via a marketplace.
Texas Sales and Use Tax Responsibilities
Marketplace providers and marketplace sellers have different obligations when it comes to Texas sales and use tax.
Responsibilities of Marketplace Providers
Marketplace providers must:
- Certify to each marketplace seller that they will assume the rights and duties of a seller under Chapter 151 of the Texas Tax Code for all sales made through their platform.
- Collect Texas sales and use tax on taxable items sold through their marketplace.
- Report and remit the collected Texas sales and use tax.
In simpler terms, the marketplace provider—not the seller—is responsible for handling sales tax on all transactions made through the platform (e.g., Amazon, Etsy).
Responsibilities of Marketplace Sellers
Does this mean marketplace sellers are exempt from Texas sales tax obligations? Not necessarily.
The rules above apply only to sales made through the marketplace. If a seller also makes sales through other channels—such as their own website, physical store, or other non-marketplace platforms—they are responsible for collecting and remitting Texas sales tax if they have nexus in Texas.
Additionally, marketplace sellers are required to:
- Provide accurate information to the marketplace provider to ensure proper tax collection and remittance.
- Maintain records of all marketplace transactions, as required by the Texas Tax Code.
Failure to provide correct or complete information to the marketplace provider could result in tax liabilities for the seller, as the Texas Comptroller may hold them responsible for deficiencies.
Nexus Considerations
The Texas Tax Code does not explicitly define how a marketplace seller’s status affects their nexus in the state. However, Comptroller Rule 3.286(b)(3)(B)(iii) clarifies that a marketplace seller is not required to obtain a sales tax permit if they sell exclusively through a certified marketplace provider.
The key takeaway is that no permit is needed if all sales occur through a marketplace provider. However, if a marketplace seller also makes sales outside of a marketplace, they may need to obtain a Texas sales tax permit and comply with tax collection and remittance requirements.
Rules for Texas Marketplace Sellers and Marketplace Providers
