Marketplace Facilitator Act Walmart

Walmart Now Collecting Washington & Minnesota Sales Tax on Behalf of Marketplace Sellers

by Jennifer Dunn

Walmart Now Collecting Sales Tax on Behalf of Marketplace Sellers

Updated November 19, 2018

Walmart is the latest eCommerce marketplace to notify customers that they would comply with Washington’s marketplace facilitator law and collect sales tax on behalf of marketplace sellers.

In the notice they sent to marketplace sellers, Walmart stated that they would begin collecting Washington sales tax for any customer who has indicated that they have sales tax nexus in Washington on February 6, 2018. This notice arrives a little over a month after Washington’s marketplace facilitator law went into effect on January 1, 2018.

Walmart sales tax Washington state

As of November 2018, Walmart just announced that they will be collecting sales tax in Minnesota as of October 2nd.

Why is Walmart collecting sales tax on behalf of 3rd party sellers?

Washington’s marketplace facilitator law states that any marketplace that meets certain criteria is now required to collect sales tax on behalf of 3rd party sellers who use the marketplace.

What does this mean for Walmart marketplace sellers?

Let’s look at how this decision will affect two groups of Walmart sellers: 1) sellers who are required to collect Washington sales tax and had previously been collecting Washington sales tax, and 2) sellers who do not have sales tax nexus in Washington and were never obligated to collect Washington sales tax.

So far Walmart, Amazon and Etsy have all agreed to comply with the law.

Walmart marketplace sellers who had previously been collecting Washington sales tax:

From now on, whenever you make a sale to a buyer in Washington, Walmart will collect and remit the sales tax to the Washington Department of Revenue on your behalf.

However, Walmart sellers with sales tax nexus in Washington are still obligated to do the following:

  • hold a valid Washington sales tax permit
  • file a Washington Sales & Use tax return and the corresponding Washington Business & Occupation (B&O) tax return by the assigned deadlines

That said, filing your sales tax return will get easier, especially if you only sell on Walmart. Now, instead of being required to break down the sales tax you collected in each city, county and special taxing district in Washington, you are only required to include a line on your return stating the amount of sales tax Walmart collected on your behalf. You state this amount as an “Other” deduction on your Washington sales tax filing, and should label this deduction “sales tax remitted by third party.”

The only caveat there is that this still means you are required to keep track of how much sales tax Walmart collects on your behalf.

Walmart marketplace sellers who had previously been collecting Minnesota sales tax:

From now on, whenever you make a sale to a buyer in Minnesota, Walmart will collect and remit the sales tax to the Minnesota Department of Revenue on your behalf.

However, Walmart sellers with sales tax nexus in Minnesota are still obligated to do the following:

  • A seller physically present in Minnesota should already be collecting and remitting Minnesota sales tax on all taxable sales into Minnesota including sales made by the seller through a marketplace.

As in Washington, now, instead of being required to break down the sales tax you collected in each city, county and special taxing district in Minnesota, you are only required to include a line on your return stating the amount of sales tax Walmart collected on your behalf. You state this amount as an “Other” deduction on your Washington sales tax filing, and should label this deduction “sales tax remitted by third party.”

The only caveat there is that this still means you are required to keep track of how much sales tax Walmart collects on your behalf.

Important sales tax note for multichannel sellers

Walmart, Amazon and Etsy are all now complying with most of the Marketplace Facilitator laws. That means they are collecting sales tax on behalf of 3rd party sellers using their platforms. But if you have sales tax nexus in Washington or Minnesota and make sales on other channels, such as your own online store, or another marketplace that isn’t obligated to comply with these marketplace facilitator laws, then you are still required to collect sales tax from buyers on those sales.

When it comes to filing your sales tax return, multichannel sellers are still required to break down the sales tax you’ve collected from your buyers by city, county and other special taxing district. (This is apart from the sales tax that compliant marketplaces like Walmart, Amazon and Etsy collected on your behalf.) You can read more about how to handle Washington sales tax here, or learn about automating Washington sales tax with TaxJar by trying a 30-day no risk free trial.

Walmart marketplace sellers who have no nexus in Washington or Minnesota:

If you do not have sales tax nexus in Washington or Minnesota, then you still have no obligation to register for a sales tax permit or file a sales tax return.

The only difference you will see is that Walmart will now collect Washington & Minnesota sales tax from your buyers on your behalf.

How to File your Next Washington Sales Tax Return

Walmart has made life a bit difficult for marketplace sellers by beginning sales tax collection on February 6, 2018 rather than on the first day of a month or quarter. In this case, that means that Walmart will have collected sales tax from your Washington buyers and remitted it back to you from January 1, 2018 to February 5, 2018. But after that, Walmart will be collecting and remitting on your behalf.

Now let’s say for example, you are due to file Washington sales tax every quarter. As of this writing, your next Washington sales tax filing (covering the period of January 1, 2018 to March 31, 2018) will be due on April 30, 2018. In this case, you’d be required to calculate only how much Walmart sales tax you collected between January 1, 2018 and February 5, 2018. From there, you’d then be required to break down how much sales tax you collected by city, county and special taxing district only for the amount you collected between January 1 and February 5.

However, you’ll also still need to know the total amount of sales tax Walmart collected on your behalf in order to completely fill out your Washington sales tax filing. Walmart should provide this info in a sales tax report.

This is where TaxJar can help. You can use your Washington state sales tax report to file your Washington sales tax return, or let us AutoFile for you so you don’t have to worry about these calculations. Sign up for a 30-day free trial of TaxJar to take our sales tax filing solution for a spin.

How to File your Next Minnesota Sales Tax Return

You’ll need to know the total amount of sales tax Walmart collected on your behalf in order to completely fill out your Minnesota sales tax filing. Walmart should provide this info in a sales tax report.

This is where TaxJar can help. You can use your Minnesota state sales tax report to file your Washington sales tax return, or let us AutoFile for you so you don’t have to worry about these calculations. Sign up for a 30-day free trial of TaxJar to take our sales tax filing solution for a spin.

To Sum it Up

  • If you don’t have sales tax nexus (i.e. an obligation to collect sales tax) in the state of Washington, the only thing that changes is that Walmart will charge sales tax to your customers
  • If you do have sales tax nexus in Washington, continue filing your Sales & Use tax and B&O tax returns by your assigned deadlines, though the way you file a sales tax return may change somewhat
  • If you do have sales tax nexus in Minnesota, continue filing your Sales & Use tax returns by your assigned deadlines, though the way you file a sales tax return may change somewhat
  • Multichannel Walmart sellers who have sales tax nexus in Washington or Minnesota: continue collecting sales tax on your other online shopping cart and marketplace sales (unless those marketplaces are collecting in Washington or Minnesota on your behalf)
  • Use caution filing your next sales tax return. Because Walmart began collection on your behalf on February 6, 2018 you’ll still be required to remit sales tax collected before that date to the state of Washington. TaxJar has your back!

Have questions or something to say about Walmart collecting Washington sales tax on behalf of marketplace sellers? Start the conversation in the comments!

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