TPT Sellers might be responsible for collecting and remitting sales tax to some states. This depends on a variety of things related to the operations of your business, including your location, the resources in your store, and where they’re purchased. The following steps will help you understand how to assess whether you have sales tax obligations and how you can take advantage of the sales tax collection and calculation tool provided on TPT’s platform, if you choose to use it.
Step 1: Determine if you need to collect state sales tax
Many states charge sales tax, but the specifics can vary a lot from state to state. Whether or not you need to collect sales tax is determined by something called “nexus.” Nexus is a concept describing the connection that a seller’s business may have to a state. States have different criteria for what can give a seller nexus.
One way a seller may have nexus in a state is through a physical presence. State laws vary in the way they define physical presence, so determining whether you have physical presence in a state is a very individualized assessment based on factors such as how your business is run, where you work or live, where you might have employees, and where you hold events.
Since the United States Supreme Court decision in South Dakota vs. Wayfair in June 2018 sellers can also now have nexus to a state through “economic nexus.” For a seller to have economic nexus to a state, that seller typically has to have a minimum number and/or amount of sales into that state over a certain period of time (typically at least 200 transactions to buyers in that state in a year, but thresholds vary and you should take into account sales you’re making on other platforms or websites off of TPT in evaluating your circumstances). The good news is that these minimum thresholds mean that these laws may not apply to many TPT Sellers.
There are several online sources that specialize in tax resources that may help you learn more about remote seller states and minimum requirements. For example, Avalara provides a state-by-state guide to sales tax nexus rules. We are not affiliated with these sites so please remember that TPT can’t vouch for the accuracy or currentness of the information on these sites.
To see the number of transactions and amount of sales you’ve made on TPT on a state-by-state basis, please visit your Sales Reports page. There is a tab called “Transactions by U.S State” where you’ll be able to view your state-by-state sales and transactions report. This information shows how many transactions you’ve had in each state on TPT over the previous 12 months, and may be helpful as you determine where you may have sales tax obligations. This report also reflects where you’ve turned on tax collection and where TPT will be remitting taxes for marketplace facilitator (MPF) states.
If you determine you have nexus and would like to enable tax collection, you’ll need to first register with that state before beginning to collect sales tax on TPT.
Step 2: Register for a sales tax license
Once you have determined where you would like to collect sales tax from your Buyers, you’ll need to first register with that state. Each state handles registration differently, so you’ll need to look into the rules of the state where you have sales tax obligations to determine how to register.
You can find information about registering with states to collect sales tax on their Department of Revenue website. For example, if you need to register in Virginia, you can find information about that here. You’ll usually need your taxpayer identification number, such as a Social Security number or Employer Identification Number (EIN), to register with a state for sales tax. Some states may charge a fee and some states may require you to renew your sales tax permit after a certain period of time.
You may want to check in with a tax advisor, or engage online services such as Avalara or TaxJar to provide assistance with this process. We are not affiliated with these sites so please remember that TPT can’t vouch for the accuracy of the information on these sites.
Before you get started, note that TPT will automatically collect and remit sales tax in MPF states which you can find listed here. In MPF states, TPT will be registering and filing one return as a marketplace, not separate returns on each Seller’s behalf.
Step 3: Set up state sales tax in your TPT account under sales tax settings
Once you’ve completed Steps 1 and 2, then it’s time to set up sales tax collection for your TPT store. To enter states and territories where you’d like to opt in to having TPT collect sales tax on your behalf, log into TPT and follow the steps below:
- Click on your profile icon and select “My Account.”
- Click on “Sales Tax Settings” in the side navigation. Then click “Manage tax settings.”
- Enter or confirm your address. It’s important we have your current address to ensure accurate sales tax calculation and collection. This address will be stored as the primary address for your profile.
- Select the states and territories where you’d like to enable sales tax collection. Remember, you should only select states and territories where you are registered for a sales tax license.
-
Click “Confirm and finish.” Once you click confirm and finish, sales tax collection will be enabled for taxable items. TPT will begin collecting sales taxes starting in January.
Step 4: Pay your state sales tax
State sales tax that has been collected on your behalf will be included in the total amount transferred to you in your monthly payout. Your Sales Reports will also be updated to include a breakdown between sales tax collected and your earnings. You'll be able to see how much sales tax has been collected in the states where you have asked TPT to collect from Buyers on your behalf.
For next steps on how to remit to states, visit our Remitting Taxes page.
Please note that the information provided here is not intended to be construed as tax advice or legal advice. Please consult an attorney or tax expert if you have any questions.