Virginia has enacted marketplace nexus provisions for marketplace facilitators, effective July 1, 2019. Marketplace facilitators will be required to register to collect and remit sales tax on behalf of its marketplace sellers if the facilitator engages in certain activities on a marketplace platform and exceeds the state’s economic nexus threshold.
A marketplace facilitator is defined as a person that contracts with a marketplace seller to facilitate the sale of marketplace seller’s products through a physical or electronic marketplace operated by the facilitator. Marketplace facilitators do not include payment processor businesses whose sole activity related to marketplace sales is to handle transactions between two parties (PayPal) or platforms/forums that exclusively provide internet advertising services (Craigs List).
A marketplace facilitator is deemed to have sufficient activity within Virginia to require registration if it meets at least one requirement under each subdivision 1, 2, and 3:
To determine the amount of a marketplace facilitator’s gross revenue and number of retail sales transactions, all sales made by marketplace sellers using the facilitator’s platform are included. If the marketplace facilitator does not have physical presence in Virginia and has both facilitated and made direct sales into the state, both types of sales will be considered to determine whether the facilitator has established economic nexus.
The marketplace nexus provisions shall not apply to any retail sales transactions occurring before July 1, 2019. However, transactions occurring before July 1, 2019 may be included in calculating sales and revenue towards the economic nexus threshold since the rule is “previous or current calendar year.” (S.B. 1083, Laws 2019)