03 / STATES & MARKETPLACES

States and marketplaces

Follow the transaction to understand who may collect tax and what the business still needs to review.

State lines complicate the checkout

States can differ in product taxability, exemptions, sourcing rules, registration, filing schedules, and nexus standards. Local taxes can matter too. Shipping destination is often relevant, but developers should not assume it is the only fact needed.

For example, a Wisconsin store sending equipment to a customer in another state must investigate that state’s requirements. Copying its Wisconsin checkout settings is not a reliable solution.

Reference: Streamlined Sales Tax: State guidance. Reviewed October 4, 2026.

Follow the sale

Direct website sale

Customer Business website Business

The business operates its checkout and needs an approved process for any tax it must collect, remit, and report. A payment processor alone does not decide those obligations.

Marketplace sale

Customer Marketplace Business

Marketplace facilitator laws can place collection and remittance duties on the marketplace for covered transactions. Confirm coverage for the jurisdiction and the transaction.

Reference: Streamlined Sales Tax: Marketplace sellers. Reviewed October 4, 2026.

A Wisconsin example

Wisconsin’s guidance requires a marketplace provider to collect and remit sales or use tax for taxable Wisconsin sales it facilitates on behalf of sellers, subject to the cited law.

That does not settle a seller’s income taxes or its separate direct-sales obligations. Review registration and reporting questions for the business’s actual mix of sales.

Reference: Wisconsin DOR: Marketplace providers and sellers. Reviewed October 4, 2026.

When a business uses both

Northwoods Supply sells one tent through its own website and another through a marketplace. Its records should distinguish those channels and identify who collected tax. Otherwise, reports can miss sales or lead to collecting tax twice.

Ask the marketplace which transactions its tax service covers.
Keep marketplace tax reports alongside direct order records.
Have the business verify whether marketplace sales count toward a state’s nexus test.
Resolve filing and registration responsibilities with a tax professional.