Ohio’s marketplace facilitator sales tax law, explained
by May 3, 2024
Please note: This blog was originally published in 2020. It’s since been updated for accuracy and comprehensiveness.
The state of Ohio now requires marketplaces to collect sales tax on behalf of sellers on online marketplaces like Amazon and Etsy.
This means that if you sell on a platform like Amazon, then Amazon will collect sales tax from your Ohio buyers on your behalf, and remit it to the state.
But as usual, there are always a few wrinkles here when it comes to eCommerce sales tax.
This post will explain what online sellers need to know about the Ohio marketplace facilitator law, and answer your frequently asked questions.
Overview of the Ohio marketplace facilitator law
Ohio’s marketplace facilitator law states that marketplace facilitators in Ohio are now required to collect Ohio sales tax if they have already reached one or more of the nexus thresholds in the current calendar year (i.e., 2019) and/or the prior calendar year (i.e.,2018).
The law states that the first day the marketplace facilitator must begin collecting and remitting sales tax from Ohio consumers is September 1, 2019, filing the September return and remitting payment on or before October 23, 2019. NOTE: marketplace sales are included in the gross sales and are also included in the exempt sales
Quick facts about the Ohio marketplace facilitator law
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- Effective date: September 1, 2019
- Threshold: Ohio’s marketplace facilitator law states that marketplace facilitators in Ohio are now required to collect Ohio sales tax if they have already reached one or more of the nexus thresholds in the current calendar year (i.e., 2019) and/or the prior calendar year (i.e.,2018).
- State law information: Read the full text of the Ohio Marketplace Facilitator Law
- Marketplaces that have adopted this law:
Frequently asked questions about marketplace facilitator laws
What exactly is a marketplace facilitator in Ohio?
Ohio law defines a marketplace facilitator as an entity, or an affiliate of an entity, that owns, operates or controls a marketplace (either physical or electronic) and facilitates the sales on that marketplace. An entity that only provides advertising services is not a marketplace facilitator.
Online sales platforms like Amazon and Etsy are considered marketplace facilitators under Ohio law.
Does this mean I can stop collecting Ohio sales tax?
Ohio law requires any out-of-state person or business, including a marketplace facilitator, making or facilitating retail sales of tangible personal property or taxable services into Ohio to register for a seller’s use tax license once substantial nexus is met.
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 Ohio sales tax permit?
Marketplace only sellers should contact the state to determine if you can cancel your sales tax permit.
Do I still need to file an Ohio sales tax return?
If you are registered to collect sales tax in Ohio (i.e. you have an active Ohio sales tax permit) then the state still requires that you file sales tax returns.
If you only make sales via marketplaces, and all of your marketplaces collect sales tax from buyers on your behalf, then you may only be required to file a “zero return.” (This is a return showing that you do not have any sales tax to remit to the state.
If you no longer have any sales tax to remit to the state of Ohio, we recommend checking directly with the state to determine if you can cancel your sales tax registration.
Be cautious here. If you are registered for a sales tax permit and do not file, the state can assess penalties even though you don’t have any sales tax to remit! We have, unfortunately, talked to too many sellers who have found this out the hard way when a tax penalty bill arrives.
What do I do with any Ohio sales tax I have already collected?
If you have already collected Ohio sales tax from buyers, it is vital that you remit that amount to the state. The only way to get in serious criminal trouble in sales tax is to collect sales tax from buyers on the state’s behalf but keep it in your own pocket.
Example:
Let’s say you sell on Amazon and Ohio requires you to file and remit sales tax quarterly. Though Amazon began collecting sales tax on your behalf on September 1, if you have any sales tax in your bank account that you collected from Q4 2018, you will still need to remit that to the Ohio Department of Taxation or face a penalty.
Does TaxJar handle this for me?
Yes.
TaxJar AutoFile handles Ohio sales tax automatically
TaxJar AutoFile automatically compiles your sales tax data the way the state of Ohio wants it filed. For example, many states, Ohio included, want sellers to break down their sales tax collected interstate (sales originating in Ohio sent to another state) and intrastate (sales made from Ohio to Ohio.)
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 Ohio 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 Ohio Department of Taxation 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 Ohio sales tax and marketplace facilitator laws:
- TaxJar’s Marketplace Facilitator FAQ
- State by State: Marketplace Facilitator Laws Explained
- Ohio Sales Tax Guide for Businesses
