How SellerZen handles Amazon Marketplace Facilitator Tax in QuickBooks Online
Several states passed Marketplace Facilitator Tax laws in 2017. These set of laws shifted the burden of sales tax collection from individual sellers to marketplace facilitators. What is a marketplace facilitator? Amazon states:
A Marketplace Facilitator is defined as a marketplace that contracts with third party sellers to promote their sale of physical property, digital goods, and services through the marketplace.
Learn more about the states that have passed similar legislation from Amazon’s Marketplace Tax page.
Even though 3rd party sellers won’t have to collect and remit sales tax to the states that have passed similar legislation, they still have to account for what Amazon collects and remits. This accounting will serve as evidence that sales tax has been received and paid for Amazon sales in those states. You should still consult with your accountant regarding your tax situation even though Amazon collects and remits on your behalf. If you want to see available sales tax services, visit our list of Amazon tools and services.
With the recent Supreme Court ruling in South Dakota v. Wayfair, the situation with online sales tax is continually changing. Check back with the Amazon page for which states that have enacted marketplace facilitator legislation. So far, these states require businesses like Amazon to collect and remit sales tax:
Here’s how SellerZen handles the Marketplace Facilitator Tax
Sellers set up the sales tax rates in QuickBooks Online for the states affected by the Marketplace Tax. When sellers create a sales tax rate, QuickBooks automatically generates the corresponding tax liability accounts.
Once sales tax is mapped in SellerZen, we will overwrite the sales tax on the QuickBooks invoices with what Amazon collects when we automatically import your orders.
SellerZen will also make a similar deposit in a Marketplace Facilitator Tax bank account used to offset the sales tax liability. Note that the Oklahoma sales tax liability account is $480.42.
When you click on Record payment, you’ll select the Marketplace Facilitator bank account. Once you pay all the Marketplace Facilitator taxes, the offset and liability accounts will be zero.
Why is this important?
Having a Marketplace Facilitator Tax account to offset the sales tax liability accounts for the taxes that Amazon collects and remits is essential because sellers aren’t paying the sales tax. Without the offset account, sellers won’t be able to “pay” the sales tax from the right account—the seller’s settlement deposit account wouldn’t be the correct account to pay the Marketplace Tax from because Amazon is handling the sales tax.
The Wayfair ruling means that more and more states will eventually require marketplaces like Amazon to collect and remit sales tax. While that’s an additional source of revenue for the states, it means increased costs for marketplace sellers to comply with the new laws. It’s uncertain now whether Amazon will collect and remit for all states for a fee or if sellers will have to seek out services and solutions. The only certainty is that consumers will have to pay more not just because of sales tax, but also because of increased costs born by merchants for compliance.
Need a step-by-step guide to QuickBooks Online accounting for your Amazon orders? Check out our Amazon to QuickBooks Online accounting series: