If you’re a seller at Walmart, it’s essential to understand how the marketplace handles sales tax. Whether you’re curious about how sales tax is applied, if Walmart collects sales tax for sellers or the specifics of Walmart’s sales tax policies in certain states, this guide will help clarify the details.
Does Walmart Collect Sales Tax for Sellers?
Walmart is classified as a marketplace facilitator. Like other major online marketplaces, Walmart is required by law to collect and remit sales tax on behalf of sellers in states where it is mandated. This means that Walmart automatically calculates the appropriate sales tax for transactions and submits it to the respective state tax authorities.
This simplifies the process for sellers, but you do still have certain obligations when it comes to sales tax:
- You must register for a sales tax permit in each state where you have nexus.
- You may need to submit filings, even if you haven’t collected any sales tax.
Selling on Walmart and Your Own Website?
An omnichannel seller is a business that sells products through marketplace facilitators like Walmart or Amazon as well as from its own website. If that’s you, here’s what you need to know:
- In some states, marketplace sales contribute to the economic nexus threshold. That means you’ll need to register for a sales tax permit and collect and remit sales tax from your direct sales. For example: the economic threshold in a state is $200,000. You sell $98,000 direct and $135,000 via Walmart. You need to collect sales tax on the $98,000.
- When you complete your sales tax filings, you need to clearly break down the figures into direct and third-party sales to customers in the state.
“Many businesses who sell on marketplaces make the mistake of thinking that they can just ignore sales tax. You do still have certain obligations so it’s important to stay informed and keep detailed records.” – Gareth Kobrin, Global Tax Expert
Grasping Marketplace Sales Tax Rules by State
Marketplace facilitator sales tax rules can vary from state to state, so it’s important to speak to a tax professional about your business’s compliance. In some “home rule states,” local jurisdictions can require sellers, rather than marketplaces, to collect tax. Using an automated sales tax solution helps you avoid mistakes which may have costly penalties.
Walmart itself has struggled to collect the correct rate of tax from customers in each state. In September 2023, Alabama updated its food tax rate. Instead of updating the rate, Walmart collected both rates (4% + 3%) from customers and had to pay compensation.
Walmart Sales Tax Exemptions
Many products are exempt from sales tax in certain states, e.g. clothing, shoes, food, and medication. Assuming marketplace facilitator laws are in place in the state/location in question, it is Walmart’s responsibility to apply the exemption and not collect sales tax on the products. Walmart automatically applies the correct sales tax based on the buyer’s location and the nature of the product.
Walmart Sales Tax-Free Weekend
Many states in the US offer tax-free weekends, often around back-to-school season, where items like clothing, school supplies, and sometimes electronics are exempt from sales tax. During these weekends, Walmart automatically applies the sales tax exemption to eligible items at checkout.
As a seller, the sales tax exemption is sorted for you, but you should bear in mind that it’s a popular time for shopping! You might want to build up additional stock and consider advertising the tax-free weekend on your social media or other marketing channels.
Conclusion
Selling through Walmart and other marketplaces makes sales tax compliance easier, but it’s important to stay on top of your obligations. Many businesses use a system like Yonda Tax which integrates with Walmart for accurate nexus monitoring, registration and reporting. An automated solution like this can be a lifesaver when you sell to customers across the US or combine marketplace selling with direct eCommerce.
Automated Registration and Reporting for Walmart Sellers
Our solution combines registration and reporting software with your own dedicated sales tax manager so you can be confident you’re selling compliantly in each state. Book a free consultation with Yonda Tax now to discuss your obligations.