Vertex Inc.

Top 10 Marketplace Facilitator Issues: Part 2

Read about five more issues faced by legislatures and marketplace facilitators.

  • October 08, 2020

In my previous post, I outlined five questions that state legislators and tax authorities are tackling as they push forward with provisions to impose new sales and use tax requirements on marketplace facilitators (MPFs) – businesses that provide digital platforms that enable third-party sales transactions. By shifting the collection and remittance burden away from sellers – particularly out-of-state sellers – and onto MPFs, states can simplify their enforcement activities and reduce collection costs.

Five More Issues Faced by Legislatures & Marketplace Facilitators

A white paper from the Multistate Tax Commission’s Uniformity Commission lays out a dozen or so of the key issues, five of which I covered in an earlier blog. Here are five more:

  1. How should the seller calculate its economic nexus threshold? In addition to its facilitated sales, a seller will likely have direct remote sales that don’t go through an MPF. When the seller needs to determine whether it has exceeded the state’s economic nexus threshold, should it be able to exclude the facilitated sales, since the MPF is handling collection and remittance on those? In general, the answer is no. Most states require both types of sales to be included in the calculation; only eight allow the exclusion of facilitated sales.
  2. What economic nexus thresholds are required? Some states use only annual gross sales volume as the threshold; two states require both a sales volume and transaction volume for threshold determination. The question of goods sold for resale complicates this issue, as does the status of remote wholesalers.
  3. Is certification required? At least 11 states require certification from the facilitator to sellers that collection on sales has begun.
  4. How is confidential taxpayer information shared? Tax agencies that are participants in the Uniform Exchange of Information Agreement can exchange taxpayer information. But states should avoid information sharing actions that might discourage businesses from coming forward to register.
  5. How is taxability determined? Businesses are pressing tax agencies to publish specific guidance to help remote sellers know which items incur sales and use tax, and which are exempted.

The complexities around this new legislative trend show no sign of going away, so we’ll be sure to keep you updated as new developments unfold.


PLEASE REMEMBER THAT THE TAX MATTERS PROVIDES INFORMATION FOR EDUCATIONAL PURPOSES, NOT SPECIFIC TAX OR LEGAL ADVICE. ALWAYS CONSULT A QUALIFIED TAX OR LEGAL ADVISOR BEFORE TAKING ANY ACTION BASED ON THIS INFORMATION. THE VIEWS AND OPINIONS EXPRESSED IN TAX MATTERS ARE THOSE OF THE AUTHORS AND DO NOT NECESSARILY REFLECT THE OFFICIAL POLICY, POSITION, OR OPINION OF VERTEX INC.

Blog Author

Michael J. Bernard, Chief Tax Officer – Transaction Tax at Vertex Inc. Vertex's Chief Tax Office (CTO) provides insight regarding the impact of tax regulations, policy, enforcement, and emerging technology trends on global tax department operations.

Michael J. Bernard

Chief Tax Officer, Transaction Tax

See All Resources by Michael

Michael Bernard is the Chief Tax Officer of Transaction Tax. In his role, he provides insight and thought leadership around tax department operations, U.S. indirect tax, tax risk management, and tax policy, as well as emerging tax trends. He is an executive-level tax attorney with a diverse portfolio of experience in corporate tax, administration, and finance, including a substantive knowledge of U.S. and international tax laws.

Prior to joining Vertex, Michael was in various tax leadership roles at Microsoft Corporation for 28 years, the most recent being Senior Director – Tax Counsel. Michael led teams in the following functional areas: direct and indirect tax controversy, sales and use, business license, property, tax IT, SOX, and telecommunications. He also co-led a corporate taxpayer advocacy group with the Washington Department of Revenue and was a Director on the Board of the Washington Research Council. Michael has also testified before administrative and lawmakers at both the federal and state level.

Michael earned both a J.D. and a Bachelor of Science in Business Administration from Creighton University. He is a part-time lecturer of Law in the LLM program at the University of Washington School of Law. Michael also served on the board of directors, executive committee, and chaired committees for The Tax Executives Institute (TEI) for nearly 25 years.

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