The way a marketplace builds an integration into AvaTax can vary. Some marketplaces will register in all jurisdictions. Other marketplaces will register as remote sellers, even in states where no marketplace laws exist (yet). And still others will register only in the states where they’re based. So, before you begin, first determine how and where you’ll collect and pay tax based on your business model and the business decisions you make as a marketplace.

Consider the following business decisions/scenarios:

Will you collect and pay tax everywhere on behalf of all your merchants?

Will you act as a marketplace facilitator (MPF) and collect and pay tax on behalf of those merchants in jurisdictions where you have an obligation to collect and pay?
- In this case merchants outside those jurisdictions will be responsible for collecting and paying tax, and AvaTax will only provide the tax calculations.

Do you intend to facilitate tax calculations where you don’t have the obligation to pay as a marketplace?
- For example, some states don’t have marketplace legislation. For sellers in these states, you may want AvaTax to calculate tax for those sales, but you don’t want to include those sales with the marketplace facilitator returns because you're not registered there.

Will you offer direct sales?

These include just some scenarios for marketplace integrations, and each will have different setups. The business model that you follow will dictate:

The type of integration that you're building

The type of transactions that are sent

How the integration sends those transactions

Where the transactions are sent

The amount and kind of information included in those transactions

The type of API calls that are made

So it's important that you understand how you will handle tax for your marketplace before beginning this integration.

Tips:

Review the state-by-state registration requirements for marketplace sellers.

If you need more assistance with determining how and where you will collect and remit tax, consult your tax adviser or our Avalara Professional Services team, or contact one of our accounting partners.

Determine where you'll collect and pay tax