Etsy Sales Tax 101

Sales Tax 101 for Etsy

by Mark Faggiano

We recently announced that TaxJar works with your Etsy store. Hooray!

Since then, our Etsy customers from have asked a lot of good questions about sales tax and how it applies to their business. We put together the presentation below.

We also wrote a free, downloadable whitepaper called “An Introduction to Sales Tax”. Download it here (PDF).

The slides (as well as the whitepaper) cover all of the most commonly asked questions we hear from customers, such as:

  • What the heck is nexus?
  • When am I supposed to collect sales tax?
  • Do I collect in my state or all states?
  • An explanation on how sales tax is calculated
  • Recommendations on how to setup tax collection in Etsy

If you have similar questions, please check out the slides below and check out the whitepaper.

Any questions about sales tax and Etsy? Let’s chat in the comment section below.
  • Jennifer L

    If I have nexus in a state through FBA, does this also affect my Etsy sales for the same state even though I’m shipping these items myself? Example – I’m in TN and have nexus in Indiana with FBA. I sell an item to an Indiana resident on Etsy and I’m shipping it from TN. Normally I would not collect tax, but now that I’m registering with FBA, does that change my tax reporting over all my business on multiple venues? Please say no. Please say no. Please say no. 🙂

  • I’m so sorry that I’m not going to say no, Jennifer. 🙁 Unfortunately, once you have nexus in a state, that affects ALL sales in that state, even though it wasn’t the Etsy sales that caused the nexus. You should set up your Etsy account to collect sales tax in Indiana. Sorry again it was bad news!

  • Periwinkle

    Hi.
    Etsy has offices in New York and California. Does that give Etsy sellers nexus in those states? To my understanding, Etsy is an advertising service and not an inventory holder (like Amazon). Do Etsy employees who manage the website create nexus for sellers?
    Thank you.

  • Hi Periwinkle,

    No, your nexus has nothing to do with Etsy’s nexus itself. You would only have nexus in places where you yourself have nexus. Here’s more about it: http://taxjar.wpengine.com/sales-tax-nexus-definition/

  • S Clarkson

    This may be a little unrelated to collecting sales tax. I just noticed on Etsy fee policy that the total they charge a seller fee on includes sales tax. Is this legal? Sorry if this is a dumb question. It just seems to me they shouldn’t be able to pad their fees this way since sales tax is not part of the product or service the seller is providing.

    • Hi there,

      That’s a very interesting observation and one we’ve never observed! I’m sure it’s legal (the big eCommerce platforms have an army of lawyers). I recommend writing into their support and asking them their reasoning. I would love to know the answer, too!

    • Hi there,

      That’s a very interesting observation and one we’ve never observed! I’m sure it’s legal (the big eCommerce platforms have an army of lawyers). I recommend writing into their support and asking them their reasoning. I would love to know the answer, too!

  • S Clarkson

    This may be a little unrelated to collecting sales tax. I just noticed on Etsy fee policy that the total they charge a seller fee on includes sales tax. Is this legal? Sorry if this is a dumb question. It just seems to me they shouldn’t be able to pad their fees this way since sales tax is not part of the product or service the seller is providing.

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