Sales Tax for Online Resellers: What You Need to Know

If you sell items on platforms like eBay, Poshmark, Depop, Vinted, or Etsy, understanding sales tax is one of the most important things you can do to protect your business. The rules are complex, vary by state and country, and the consequences of getting them wrong can be costly. This guide breaks down everything you need to know about sales tax as an online reseller, whether you are a part-time flipper or a full-time business.

Understanding Sales Tax Nexus in the United States

In the US, sales tax is governed at the state level, which means there is no single federal sales tax. Instead, 45 states (plus Washington D.C.) impose their own sales tax, each with different rates, rules, and exemptions. The key concept you need to understand is nexus — the connection between your business and a state that triggers a sales tax obligation.

Physical Nexus

Physical nexus is the traditional standard. You have physical nexus in a state if you have a physical presence there. This includes:

• Your home or office location
• A warehouse or storage facility (including Amazon FBA warehouses)
• Employees or contractors working in the state
• Attending trade shows or craft fairs in the state

If you operate from your home in Texas, for example, you have physical nexus in Texas and are required to collect and remit Texas sales tax on taxable sales delivered within the state.

Economic Nexus

Since the landmark 2018 Supreme Court decision in South Dakota v. Wayfair, states can also require you to collect sales tax based on your economic activity in the state — even if you have no physical presence there. This is called economic nexus.

Most states set their economic nexus threshold at $100,000 in sales or 200 transactions in the state during the current or prior calendar year. However, some states differ:

For most individual resellers selling on platforms like eBay and Depop, reaching these thresholds through your own website sales alone is unlikely. But if you sell through multiple channels and your combined revenue grows, you need to track your sales by state carefully.

Marketplace Facilitator Laws: The Game Changer

Here is the good news for most resellers: marketplace facilitator laws have dramatically simplified sales tax compliance. Under these laws, the marketplace (not the seller) is responsible for collecting and remitting sales tax on sales made through its platform.

As of 2026, all 45 states with sales tax plus Washington D.C. have enacted marketplace facilitator laws. This means:

• eBay collects and remits sales tax on your behalf in all applicable states
• Poshmark handles sales tax collection automatically
• Depop collects sales tax where required
• Etsy collects and remits in all marketplace facilitator states
• Mercari collects sales tax automatically

This is a huge relief for resellers. You do not need to register for a sales tax permit in every state where your marketplace handles collection. However, there are important exceptions.

When You Still Need to Collect Sales Tax Yourself

You are still responsible for sales tax if you sell through channels where no marketplace facilitator law applies:

• Your own website (Shopify, WooCommerce, etc.)
• In-person sales at flea markets, garage sales, or craft fairs
• Direct sales via social media (Facebook groups, Instagram DMs)
• Wholesale transactions

If you sell through any of these channels in addition to platforms like eBay or Vinted, you need to register for a sales tax permit in your home state and potentially in other states where you have nexus.

State Registration Requirements

If you determine you need to collect sales tax yourself, you must register for a sales tax permit (sometimes called a seller's permit or resale certificate) in each state where you have an obligation. The process typically involves:

• Applying through the state's Department of Revenue website
• Providing your business details (EIN or SSN, business address)
• Receiving your permit number (usually within 1-2 weeks)
• Filing returns on the required schedule (monthly, quarterly, or annually depending on your volume)

Many states also offer a resale certificate, which allows you to purchase inventory without paying sales tax at the point of purchase. You will then collect sales tax when you resell the item. This is critical for resellers who source from wholesalers, liquidation pallets, or retail arbitrage.

UK VAT for Resellers

If you sell on platforms like eBay or Vinted in the United Kingdom, Value Added Tax (VAT) is the equivalent of sales tax. The key threshold to know is:

• You must register for VAT if your taxable turnover exceeds £85,000 in any 12-month rolling period
• You can voluntarily register below this threshold, which allows you to reclaim VAT on business purchases
• The standard VAT rate is 20%

The Flat Rate Scheme

For smaller resellers, HMRC offers the Flat Rate Scheme, which simplifies VAT accounting. Instead of tracking VAT on every purchase and sale, you pay a fixed percentage of your gross turnover. For retail businesses, the flat rate is typically 7.5% in the first year (with the 1% discount) and 8.5% thereafter. This can save time and sometimes money compared to standard VAT accounting.

When to Register

You should monitor your rolling 12-month turnover carefully. If you hit £85,000, you must notify HMRC within 30 days and start charging VAT from the date you exceeded the threshold. Failing to register on time can result in penalties and backdated VAT liabilities.

Worked Examples: Part-Time vs Full-Time Reseller

Example 1: Part-Time Seller — $5,000/Year Revenue (US)

Sarah sells vintage clothing on Depop and Poshmark as a side hustle, earning about $5,000 per year. Here is her sales tax situation:

• All sales are through Depop and Poshmark, which collect sales tax automatically
• She does not meet economic nexus thresholds in any state beyond her home state
• She does not need to register for a sales tax permit
• Action required: None for sales tax. She still needs to report income on her tax return

Example 2: Full-Time Seller — $50,000/Year Revenue (US)

Mike runs a full-time reselling business across eBay, his own Shopify store, and local flea markets. He earns $50,000 per year: $35,000 from eBay, $10,000 from Shopify, and $5,000 from flea markets.

• eBay collects sales tax on his $35,000 in marketplace sales
• He must collect sales tax himself on his $10,000 in Shopify sales (in states where he has nexus)
• He must collect sales tax on his $5,000 in flea market sales (in his home state)
• He should register for a sales tax permit in his home state
• He should obtain a resale certificate to buy inventory tax-free
• Action required: Register in home state, file returns quarterly, track Shopify sales by destination state

Common Sales Tax Mistakes Resellers Make

Avoid these pitfalls that trip up many resellers on eBay, Etsy, and other platforms:

• Not tracking inventory costs: Without accurate cost records, you cannot properly calculate your cost of goods sold (COGS) or determine whether items are taxable. Tools like ListingGenie can help you track your inventory and sales across platforms.
• Ignoring nexus in multiple states: If you store inventory in multiple states (common with Amazon FBA), you may have physical nexus in each of those states for your non-marketplace sales.
• Assuming marketplace facilitator laws cover everything: They only cover sales made through the marketplace platform itself. Direct sales are your responsibility.
• Not keeping resale certificates on file: If you buy inventory for resale and claim a sales tax exemption, you need a valid resale certificate. If audited, you will need to produce it.
• Confusing sales tax with income tax: Sales tax is collected from buyers and remitted to the state. Income tax is paid on your profits. They are separate obligations.
• Not filing zero returns: If you are registered for sales tax but have no sales in a period, most states still require you to file a return showing zero tax due. Failing to file can result in penalties.

How to Stay Compliant

Follow these practical steps to manage your sales tax obligations:

• Determine where you have nexus (physical and economic)
• Register for sales tax permits in states where you are required to collect
• Obtain resale certificates for inventory purchases
• Use accounting software that tracks sales by state
• Set aside collected sales tax in a separate bank account
• File returns on time, every time, even if the amount is zero
• Review your nexus status annually as your business grows

Sales tax compliance may seem overwhelming, but for most resellers who sell primarily through platforms like eBay, Poshmark, Vinted, and Depop, the marketplace facilitator laws handle the heavy lifting. Focus on understanding your obligations for any non-marketplace sales, keep accurate records, and consult a tax professional if your situation becomes complex.

Frequently Asked Questions

• Do I need to charge sales tax if I only sell on eBay?

  No. eBay is a marketplace facilitator and collects and remits sales tax on your behalf in all states that require it. You do not need to separately register or collect sales tax for eBay sales.

• What is the difference between sales tax and use tax?

  Sales tax is collected by the seller at the point of sale. Use tax is owed by the buyer when they purchase an item from out of state and no sales tax was collected. As a reseller, you may owe use tax on inventory you purchase for personal use.

• Do I need a resale certificate to buy inventory?

  A resale certificate allows you to purchase inventory without paying sales tax, since you will collect tax when you resell the item. It is not strictly required, but without one, you will pay sales tax on your purchases and cannot always recover it.

• Does Vinted collect sales tax?

  Vinted operates under marketplace facilitator laws in the US and collects sales tax where required. In the UK, Vinted handles VAT on sales under £135. Check your specific platform's policies as they can change.

• How often do I need to file sales tax returns?

  Filing frequency depends on your sales volume and the state. Low-volume sellers typically file annually, moderate sellers file quarterly, and high-volume sellers file monthly. Your state will assign a filing frequency when you register.

• Can I get in trouble for not collecting sales tax?

  Yes. States can assess back taxes, interest, and penalties if you should have been collecting sales tax but were not. However, if all your sales are through marketplace facilitator platforms, the platform handles compliance for those sales.