California Marketplace Facilitator Rules 2025: What Resellers Need to Know

California Marketplace Facilitator Rules 2025: What Resellers Need to Know

Here’s an in-depth look at California’s sales tax marketplace facilitator rules in 2025, especially how they affect resellers. These rules impact who collects tax, when, and what thresholds apply. If you sell via Amazon, Etsy, eBay, or run your own store, this guide helps you stay compliant.

1) What Is a Marketplace Facilitator in California

  • A marketplace facilitator (also called “marketplace provider”) is someone (or a platform) that contracts with marketplace sellers to facilitate sales of tangible goods, including by listing the goods, collecting payment, or remitting payment to the seller. CDTFA+1

  • Examples: Amazon, Etsy, eBay. If you sell on these platforms, they are typically responsible for collecting and remitting sales tax on your sales made through them. TaxJar+1

2) When Did These Rules Become Effective

  • The Marketplace Facilitator Act in California took effect October 1, 2019. TaxJar+1

  • The key economic nexus thresholds (sales volume) that trigger tax obligations were set earlier in 2019, under A.B. 147. BDO+1

3) Economic Nexus Thresholds

  • To be considered “engaged in business” in California (and thus required to register and collect sales tax), a seller or marketplace facilitator must have over $500,000 in combined sales of tangible personal property delivered into California in the preceding or current calendar year. CDTFA+3BDO+3Sales Tax Institute+3

  • Important: California does not use the separate “200 transaction” threshold now. That older test was removed when AB 147 was enacted. Spidell+1

4) Who Collects Tax: Facilitator vs. Seller

  • Marketplace facilitators are required to collect and remit sales tax on all marketplace sales made through their platform, regardless of whether the seller would have had a nexus or not. CDTFA+1

  • Marketplace sellers do not need to collect sales tax on sales made through a facilitator platform (because the facilitator does it) once the facilitator is properly collecting and remitting. However, sellers are responsible for tax on direct sales (outside those facilitator platforms) if they meet the nexus threshold. TaxCloud+1

5) Local/Use Tax & District Taxes

  • Sales tax in California includes state base tax plus local/district taxes depending on the delivery address. Marketplace facilitator rules require the collection of applicable local tax districts. CDTFA+2Zamp+2

  • Sellers must correctly calculate and collect based on where the buyer takes delivery. That means you must have systems to account for destination rates. TaxCloud+1

6) Recent Updates & Additional Requirements (2024-2025)

  • SB 1144 (enacted August 16, 2024) expands information collection obligations for high-volume third-party sellers on marketplace platforms. This includes verifying tax documents and authorizations, location/banking info, etc. PwC

  • Marketplace facilitators must also comply with additional recordkeeping and security/disclosure rules, especially for “high-volume” sellers. PwC

7) Case Study: How a Reseller Must Comply

Scenario: A seller “Sunny Boutique” sells handmade home goods through Etsy and also via their own Shopify store. Total sales delivered into California amount to $600,000 in the last 12 months.

Sales Channel Who Must Collect What Sunny Boutique Must Do
Sales via Etsy (marketplace) Etsy (as facilitator) collects and remits tax for those orders Sunny should keep documentation from Etsy showing they are collecting on her behalf. She doesn’t collect tax on those Etsy sales.
Direct sales via Shopify Sunny must collect state + appropriate local & district tax on those sales Register with California's CDTFA, obtain a seller’s permit, and make sure Shopify checkout calculates correct tax by buyer’s delivery address.
Information / recordkeeping Both Etsy (marketplace) and Sunny must retain required seller/facilitator certifications; high-volume seller obligations apply to Sunny if Etsy classifies her as “high volume” Sunny should ensure she provides any required seller verification info to Etsy and maintain backup documentation for audits.

8) Action Steps for Resellers in 2025

If you sell into California in any capacity, here’s what to do:

  1. Check if marketplace facilitator is collecting for you. Get documentation or certification.

  2. Calculate your total California sales across all channels for the last 12-month period. If over $500,000, prepare to register with the California Department of Tax and Fee Administration (CDTFA).

  3. Register for a seller’s permit with CDTFA if needed.

  4. Ensure your checkout/ordering system on your direct sales site properly applies tax based on the buyer’s delivery address, including local/district rates.

  5. Provide required information if you’re a “high volume third-party seller” (per SB 1144).

  6. Keep thorough records (sales, invoices, certifications, etc.) for at least what CDTFA requires (often multiple years).

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