Beginning on July 1, 2019, “marketplace facilitators” must register and collect Indiana sales tax on behalf of their sellers for transactions into Indiana. In some cases, marketplace facilitators may also need to collect County Innkeepers Tax (CIT) and Food and Beverage (FAB) taxes.
Marketplace facilitators are businesses or people who: (1) own, operate, or otherwise control a “marketplace;” and (2) facilitate a retail transaction. Marketplaces can be either physical or electronic. The seller’s products may include tangible personal property, specified digital products, rooms, lodgings, or accommodations, or enumerated services.
A “marketplace” means a business that is:
- Listing, making available, or advertising products.
- Transmitting or otherwise communicating an offer or acceptance of a retail transaction of products between a seller and a purchaser.
- Providing or offering fulfillment or storage services for a seller.
- Setting prices for the seller’s products.
- Providing or offering customer service to a seller or a seller’s customers, or accepting or assisting with collecting and taking orders, returns, or exchanges of products sold by a seller.
- Branding sales as those of the marketplace facilitator.
Marketplaces facilitate transactions when they do any of the following on behalf of a seller:
- Collect the sales price or purchase price of the seller’s products.
- Provide access to payment processing services, either directly or indirectly.
- Charging, collecting, or otherwise receiving fees or other consideration for transactions made on its electronic marketplaces.
The term “marketplace facilitator” does not include a payment processor business that is appointed by a merchant to handle payment transactions from various channels (including credit cards and debit cards).
Marketplace facilitators should register for sales tax, county innkeeper’s tax and food and beverage tax (as applicable to their business) using INBiz or a paper BT-1. Marketplace facilitators can use the same registration for direct sales and facilitated sales. A marketplace facilitator should use the paper BT-1 only if they wish to create separate registrations for facilitated and direct sales.
Marketplace facilitators should list all adopting counties and municipalities from which it picks-up food and beverages in Box #2, Section D on Form BT-1 or in INBiz. This differs from the instructions for caterers requiring the listing of delivery locations.
Marketplace facilitators are required to file a monthly sales tax return in INTax. If not direct or facilitated sales are reported, file a $0 return. When reporting county tax (FAB or CIT), the appropriate return must be filed for each adopting county or municipality listed in Box #2 or in INBiz regardless as to whether they facilitated any food and beverage sales from that locality for that month.
When registering to file CIT returns, marketplace facilitators do not need to register separately for each adopting county. DOR will automatically register marketplace facilitators for all adopting counties once the initial registration is complete. However, marketplace facilitators are only required to file a CIT return in INtax for only the counties and periods in which the marketplace facilitator conducted a transaction in that county.
Indiana’s current sales tax rate is 7%. For more information, including FAB and CIT tax rates, please see the following documents in DOR’s Tax Library.
- Sales Tax Information Bulletin #89: Registration, Collection, and Remittance Requirements for Remote Sellers and Marketplace Facilitators
- Sales Tax Information Bulletin #11: Application of Sales Tax to Restaurant Owners Including Fast Food Operations and Caterers
- Sales Tax Information Bulletin #29: Sales of Food
- Commissioner’s Directive #30: Local Food and Beverage Taxes
- Departmental Notice #40: County Innkeeper’s Taxes
- Information Bulletin #41: Sales Tax Application to Furnishing of Accommodations
Frequently Asked Questions
- What are the nexus requirements for registration by a marketplace facilitator?
The nexus requirements are the same for marketplace facilitators and remote sellers. Marketplace facilitators are required to register if they meet either or both of the following conditions in the previous calendar year or within the current calendar year:
- Gross revenue from sales into Indiana exceeding $100,000, including sales that are not subject to sales tax or are considered tax exempt; or
- 200 or more separate transactions into Indiana.
- When did the requirement go into effect?
The operative statute, IC 6-2.5-2-1(d), became effective on July 1, 2019.
- Can I get an extension of time beyond the July 1, 2019, effective date?
The applicable statutes do not grant DOR the authority to allow extensions. Marketplace facilitators who meet nexus requirements should register and begin filing Indiana sales tax as soon as possible.
- What about the periods after July 1, 2019, until I register?
DOR may consider special circumstances in addressing the liability of marketplace facilitators that were unable to begin collecting Indiana tax on July 1, 2019. However, these situations cannot be addressed until after registration. If a marketplace facilitator believes that their circumstances warrant special consideration, they may request such in writing to:
Indiana Department of Revenue
Sales Tax Administration
100 N. Senate Ave., Room N248
Indianapolis, IN 46204.
- How does a marketplace facilitator register for sales tax?
Marketplace facilitators should register for sales tax using INBiz or a paper BT-1. Marketplace facilitators can use the same registration for direct sales and facilitated sales. A marketplace facilitator should use the paper BT-1 only if they wish to create separate registrations for facilitated and direct sales
- How does a marketplace facilitator register for innkeeper's tax and/or food and beverage tax?
Marketplace facilitators should register for innkeeper's and/or food and beverage tax using INBiz or a paper BT-1. Marketplace facilitators can use the same registration for their direct sales and facilitated sales. A marketplace facilitator should use the paper BT-1 only if they wish to create separate registrations for facilitated and direct sales.
- How does this impact the sellers on the marketplace?
A retail merchant already selling on a marketplace is NOT required to make changes to their Indiana sales tax, innkeeper’s tax or food and beverage tax registrations. If a seller has previously registered, but only makes sales on one or more marketplaces, they can elect to either maintain their account or close the account. They can also elect to adjust their filing frequency based on their average remittance after removing any sales on a marketplace. Again, a seller can elect to make no changes to their account and simply file $0 returns if they do not have any direct sales.
A retail merchant selling on a marketplace will not include marketplace sales for purposes of determining whether the seller is required to register separately to collect Indiana sales tax as a remote seller. However, a seller that maintains its registration is still required to collect tax on any direct sales even if they no longer meet the remote seller threshold. Note that the threshold is measured by both the current and preceding calendar year. A seller can close their account using form BC-100 and indicate that they no longer engage in retail transactions because they only sell through marketplaces or indicate that they no longer have nexus if they did not meet the remote seller threshold in either the current or previous calendar year.
- What documentation should a marketplace seller obtain from a marketplace facilitator to confirm that the marketplace is collecting and remitting sales tax on seller's sales?
A marketplace facilitator may issue an ST-105 exemption certificate to the seller by checking box marked "Other" in Section #3 and writing in "Marketplace Sales." The marketplace facilitator should fully complete Section #1 including its Indiana TID. The box for blanket purchases should be checked in Section #2.
- How should a marketplace seller report sales through a marketplace on its Indiana sales tax return?
A marketplace facilitator is considered to be the retail merchant with regard to sales by third-party sellers on its marketplace. Such sales are not legally considered to be sales by the third-party seller for Indiana sales tax purposes. A seller that only makes sales through a marketplace facilitator is not required to register and file Indiana sales tax returns. If a marketplace seller is otherwise required to register for Indiana sales tax due to physical nexus or meeting the remote seller threshold, then the seller should report marketplace sales as if they are exempt sales on the ST-103.
- What if the marketplace facilitator is collecting sales tax, but remitting it back to the seller?
A marketplace facilitator is required to remit any tax collected to DOR. However, in the event the marketplace facilitator incorrectly remits the tax to the seller, the seller should remit the tax to the DOR.
- What if the marketplace facilitator is not collecting tax on required sales?
The marketplace seller has no obligation to collect tax on facilitated sales even if the marketplace facilitator fails to do so.
- What happens if a marketplace facilitator fails to collect tax on a sale due to incorrect information provided by the seller, e.g. the seller indicates that the product is exempt food?
The marketplace facilitator is allowed to rely on information provided by the seller. The marketplace facilitator is relieved of liability if it fails to collect tax due to incorrect information provided by the seller. Under normal circumstances, the seller is not liable for such uncollected tax even it was due to erroneous information that it provided to that marketplace facilitator. The purchasers are still liable for such tax.
- Do any of the counties or municipalities have jurisdiction specific innkeeper’s tax or food and beverage tax provisions that might impact marketplace facilitators?
Elkhart County innkeeper’s tax is imposed on hotels, motels, inns, or tourist cabins with 30 or more rooms for rent. If the hotel, motel, inn, or tourist cabin has twenty-nine rooms or less for rent, the CIT is not imposed; however, this limitation does not apply to rooms or lodgings in a house, apartment, or condominium, so tax must still be collected regardless of the number of rooms rented or furnished in the house, apartment, or condominium.
Clark County innkeeper’s tax was previously listed as having a 30-room minimum on DOR’s website. However, that minimum room threshold is no longer applicable. Carroll County innkeeper’s tax does not become effective until a 30-room threshold for the entire county is reached. Unless all rooms in all accommodations in the county, including rooms or lodgings in a house, condominium, or apartment, reaches that maximum, the tax will not be collected by a retail merchant or marketplace facilitator.