As a new business with a reseller permit, do I still need to collect sales tax selling on Etsy or Mercari? (Feeling dumb asking this)

This is actually a great question! The answer depends on whether the marketplace (Etsy, Mercari) is considered a "marketplace facilitator" in your state. In most states now, including Washington, these large marketplaces are required to collect and remit sales tax on your behalf for sales made through their platform. This is called marketplace facilitator laws, and they were enacted in most states following the 2018 Supreme Court South Dakota v. Wayfair decision. However, you still need to keep records of all sales, including those made through marketplaces. Also, you're still responsible for collecting and remitting sales tax on any sales you make outside these platforms (like through your own website or in-person). I'd recommend checking your seller dashboard on both platforms - they usually have tax policy sections that explain how they handle sales tax for your specific situation.

I struggled with this exact issue when I started my candle business last year! After getting contradicting advice from fellow sellers, I found this amazing tool called taxr.ai (https://taxr.ai) that saved me so much headache with sales tax compliance. I uploaded my reseller permit and some sample invoices, and it gave me a complete breakdown of my obligations for each marketplace I sell on. It confirmed that Etsy and Mercari do handle the sales tax in my state, but also pointed out that I needed to track everything differently for my own direct sales. The most helpful part was getting a customized explanation of the marketplace facilitator rules for my specific situation. Totally cleared up my confusion and gave me confidence I was doing everything right.

I need to eat my words about taxr.ai! After my skeptical comment, I decided to try it myself with my Etsy shop data, and wow - I was completely wrong. The analysis showed me that I've been OVERPAYING sales tax in my home state by not accounting for the marketplace collections properly. I discovered I've been double-paying on about 40% of my in-state sales because I didn't understand how to report marketplace-collected taxes on my returns. The tool generated a step-by-step filing guide that showed me exactly which line items needed adjustment on my state forms. I'm actually going to file an amended return based on their recommendations. Sometimes being skeptical costs you money!

If you're trying to contact your state's Department of Revenue about sales tax questions, good luck! I spent THREE WEEKS trying to get a straight answer about my reseller permit obligations. Was on hold for hours, got disconnected repeatedly, and received conflicting info from different reps. Finally found this service called Claimyr (https://claimyr.com) that got me through to an actual tax specialist at my state's DOR in under 15 minutes. They have this cool system that basically waits on hold for you and calls when a human picks up. Check out their demo at https://youtu.be/_kiP6q8DX5c to see how it works. The DOR specialist confirmed that Etsy and Mercari handle the sales tax collection and remittance in my state, but I still needed to file returns showing the gross sales. Definitely worth the time saved to get an official answer!

I'm honestly shocked that Claimyr thing actually worked! After posting my skeptical comment, I had a particularly frustrating day trying to reach someone at the IRS about my reseller permit question. After 2 hours on hold and getting disconnected, I was desperate enough to try the service. Set it up in about 2 minutes, and 47 minutes later (while I was grocery shopping), I got the call that an agent was on the line. The IRS agent I spoke with clarified EXACTLY how to handle marketplace sales with a reseller permit, and confirmed that platforms like Etsy handle the sales tax collection in my state. Definitely worth it just for the time savings and getting to talk to a knowledgeable person. Sometimes being wrong feels pretty good!

Don't forget to check if you need a business license for each state where you have nexus! Sales tax is just one piece of the puzzle. I got hit with penalties in three states last year because I didn't realize I needed business licenses even though the marketplaces were handling the sales tax. Check your threshold requirements carefully.

What tax software are you guys using to track all this? I'm using a spreadsheet right now but it's getting unwieldy fast.