Good news for marketplace sellers! The state of Indiana now requires marketplaces to collect sales tax on behalf of sellers on online marketplaces like Amazon, and eBay.
This means that if you sell on a platform like Amazon, then Amazon will collect sales tax from your Indiana buyers on your behalf, and remit it to the state.
But as usual, there are always a few wrenches in the works when it comes to eCommerce sales tax.
This post will explain what online sellers need to know about the Indiana marketplace facilitator law, and answer your frequently asked questions.
Overview of the Indiana Marketplace Facilitator Law
Indiana’s marketplace facilitator law requires that marketplace facilitators in Indiana must collect and remit sales tax on behalf of their marketplace sellers.
Quick Facts about the Indiana Marketplace Facilitator Law
- Effective date: July 1, 2019
- Threshold: This law requires that marketplace facilitators in Indiana must collect and remit sales tax on behalf of their marketplace sellers.
- State law information: Read the full text of the Indiana’s Remote Seller Information
- Marketplaces that have adopted this law:
Frequently asked Questions about Marketplace Facilitator Laws
What exactly is a marketplace facilitator in Indiana?
Indiana law defines marketplace facilitators as businesses or people who: own, operate, or otherwise control a “marketplace;” and facilitate a retail transaction. Marketplaces can be either physical or electronic.
Online sales platforms like Amazon and Etsy are considered marketplace facilitators under Indiana law.
Does this mean I can stop collecting Indiana sales tax?
It depends. Every business’s sales tax situation is unique to that business.
Let’s look at a couple of common scenarios for businesses who have sales tax nexus in Indiana.
Example #1: You only make sales on online marketplaces.
In this example, you only sell on Amazon and eBay. Because Amazon and eBay are both now collecting sales tax from buyers on your behalf, you are not required to collect sales tax from your buyers. (However, you may still be required to file periodic sales tax returns. See “Does this mean I can cancel my Indiana sales tax permit?” below.)
Example #2: You sell on online marketplaces and your own online store and/or brick and mortar store.
In this case, you’d still be required to collect sales tax from buyers who purchase from you through your own online store (for example, via your BigCommerce or Shopify store). And you would still be required to collect sales tax from your brick and mortar customers.
Marketplace facilitator laws only cover marketplaces. The state still requires that merchants collect sales tax from buyers via sales channels where the marketplace facilitator laws do not apply.
Does this mean I can cancel my Indiana sales tax permit?
Indiana has stated that marketplace only sellers can elect to keep or cancel their Indiana sales tax permits.
Do I still need to file an Indiana sales tax return?
Marketplace sellers who have an active Indiana sales tax permit are still required to file and remit Indiana sales tax.
What do I do with any Indiana sales tax I have already collected?
If you have collected sales tax on an Indiana sale, you must remit the sales tax to DOR. Failure to remit can potentially subject you to civil and criminal penalties.
Does TaxJar handle this for me?
TaxJar AutoFile Handles Indiana Sales Tax Automatically
TaxJar AutoFile automatically compiles your sales tax data the way the state of Indiana wants it filed. For example, many states, Indiana included, want sellers to break down their sales tax collected interstate (sales originating in Indiana sent to another state) and intrastate (sales made from Indiana to Indiana.)
If a marketplace has collected sales tax on your behalf, TaxJar reports that directly to the state so that the state is aware you have met your sales tax obligations.
If you currently AutoFile your Indiana sales tax returns, you don’t need to do a thing. It’s handled!
TaxJar Reports Give You all the Info You need to File Manually
If you prefer to file manually, your TaxJar Reports also reflect what the Indiana Department of Revenue wants to see on your tax return.
Also don’t worry that you will double pay. TaxJar accounts for sales tax collected on your behalf, and only shows you the amount you owe to the state out of your pocket.
Further reading on Indiana sales tax and marketplace facilitator laws:
- TaxJar’s Marketplace Facilitator FAQ
- State by State: Marketplace Facilitator Laws Explained
- Indiana Sales Tax Guide for Businesses
Do you have questions or something to say about the Indiana marketplace facilitator law? Start the conversation in the comments!