North Carolina Provides Guidance on Application of Marketplace Facilitator Rules

April 28, 2022

By: Betsy Goldstein, SALT Manager

At a glance

  • The main takeaway: A private letter ruling in North Carolina illustrated that you don’t have to be a big retail brand to be considered a marketplace facilitator.
  • Assess the impact: While guidance can vary from state-to-state, this ruling demonstrates how private marketplaces should be prepared to collect and pay sales tax if the state they operate in classifies their online platform as a marketplace facilitator.
  • Take the next step: Aprio’s State and Local Tax (SALT) Team can help you navigate marketplace facilitator rules and sales tax requirements, so you remain in compliance.

Schedule a free consultation today to learn more!

The full story:

When we hear the term “marketplace facilitator,” many of us instinctively think about Amazon, eBay and the big box retailers’ online stores (e.g., Target and Walmart). However, you don’t have to operate a large online market to be considered a marketplace facilitator. As we continue to see rules and guidance for marketplace facilitators develop among the states, in a recent North Carolina Private Letter Ruling, the Secretary of Revenue determined that a taxpayer was a marketplace facilitator even though its online marketplace is not open to the general public.[1]

The taxpayer created a business-to-business online platform where qualified businesses can list inventory of certain parts for sale to other businesses. The taxpayer owns and administers the electronic infrastructure of the platform and provides the necessary support to enable connection to the platform.

Only qualified customers that receive log-in credentials can access the platform, which can occur in two ways: a customer may request an invitation from the specific company whose parts it purchases, or the company may automatically create accounts for its customers. In both cases, customers will receive log-in credentials, but once logged-in, they can view and order parts only from the specific company that invited them. 

Through the platform, a customer selects its inventory to be added to the order and chooses a delivery option (pick up at a physical location, delivery, or shipment). In addition, each customer has two payment options: pre-existing credit line with the selling company or credit card (assuming the seller has entered into an agreement with the taxpayer’s designated credit card processor). If the customer chooses its pre-existing credit line, the platform “pings” a software system that allows the customer and seller to complete the order. If the credit card option is selected, the customer is transferred to the processor’s payment gateway via a pop-up window to complete the transaction.

North Carolina defines “marketplace” as a “physical or electronic place, forum, platform, application, or other method by which a marketplace seller sells or offers to sell items, the delivery of or first use of which is sourced to this State.”[2] A “marketplace facilitator” is defined as a person that directly or indirectly, and whether through one or more affiliates, does both of the following:

  1. Lists or otherwise makes available for sale a marketplace seller’s items through a marketplace owned or operated by the marketplace facilitator.
  2. Does one or more of the following:
    • Collects the sales price or purchase price of a marketplace seller’s items or otherwise processes payment.
    • Makes payment processing services available to purchasers for the sale of a marketplace seller’s items.[3]

The Secretary of Revenue determined that the taxpayer here met both prongs of the test. First, it operates a marketplace that makes available for sale the items of marketplace sellers. Second, it makes payment processing services available when the platform “pings” the software system to accept pre-existing credit accounts and when it opens a pop-up window to the credit card processor’s payment gateway.

The bottom line

As this ruling illustrates, even a private marketplace may be considered a marketplace facilitator and have obligations to collect and remit sales tax on the North Carolina sales generated through the market. Aprio’s SALT team has experience with these new marketplace facilitator rules and the sales tax compliance requirements associated with being a marketplace facilitator. Our team can assist your business to ensure that you comply with sales tax requirements and do not incur unexpected tax liabilities or penalties. We constantly monitor these and other important state tax topics, and we will include any significant developments in future issues of the Aprio SALT Newsletter.

This article was featured in the April 2022 SALT Newsletter.

For more information contact Betsy Goldstein, SALT Manager, at or call 770-353-7119 or contact Jeff Glickman at or call 770-353-4791.

[1] North Carolina Private Letter Ruling SUPLR 2022-0001, February 28, 2022. Please note that identifying information in this ruling has been redacted.

[2] N.C. Gen. Stat. § 105-164.3(129).

[3] N.C. Gen. Stat. § 105-164.3(133).


Any tax advice contained in this communication (including any attachments) is not intended or written to be used, and cannot be used, for the purpose of (i) avoiding penalties under the Internal Revenue Code or under any state or local tax law or (ii) promoting, marketing or recommending to another party any transaction or matter addressed herein. Please do not hesitate to contact us if you have any questions regarding the matter.

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