Sales Tax & Bonanza

Recently, several US states and countries worldwide have added Marketplace Facilitator Provisions to their sales tax laws. Bonanza is considered a Marketplace Facilitator, and is therefore responsible for calculating, collecting, and remitting tax for all sales made to buyers located in specific states, the European Union (EU), the United Kingdom (UK) and Australia (AU), regardless of the seller's location. We recommend all sellers consult a tax professional in their state to determine their tax obligations. In this page and throughout our site, Bonanza is not acting as a tax advisor and is not able to provide tax advice, but we do want to keep you updated about recent law changes that impact our site.

What is a marketplace facilitator?
How will this impact checkout?
What actions should I take to ensure my items can be purchased by buyers in these states?
What happens if I don't complete the required actions?
How will the sales tax be displayed on the payment I receive?
What happens if the buyer is refunded?
How is this different from how Bonanza has handled sales tax in the past?
What about collecting sales tax for buyers in other locations?

What is a marketplace facilitator?

A marketplace facilitator is a business or organization that contracts with third parties to sell goods and services on its platform and aids retail sales of at least $250,000 during a 12-month period. That's us!

How will this impact checkout?

Bonanza is a registered sales tax vendor and will collect sales tax on all taxable sales that it facilitates for delivery to an address in the following locations:

Bonanza will collect and remit sales tax on behalf of sellers for all applicable transactions where the buyer is located in the states listed above (regardless of the seller's location), the European Union (EU)*, the United Kingdom (UK)** and Australia (AU).

Our partner, TaxCloud, will calculate the tax amount based on the type of product, the buyer’s location, and the location from which the item is shipped. Payment for the item(s) and any shipping costs will be sent directly to the seller, while the tax portion will be sent to Bonanza. Bonanza will then remit the sales tax to those states through our partnership with TaxCloud.

We’re working closely with our partners at TaxCloud to ensure we use the most up-to-date tax rates and regulations. It’s likely that other states will enact Marketplace Facilitator Provisions, which will then require Bonanza to collect tax on additional transactions. We will notify sellers as soon as possible when these changes take effect.

*VAT will be collected and remitted for transactions where the seller is located outside of the EU and the value does not exceed €150

** VAT will be collected and remitted on transactions where the value does not exceed £135

What actions should I take to ensure my items can be purchased by buyers in these states?

1. Authorize Bonanza to collect taxes.

If you accept payments through PayPal or Amazon Pay, you will need to authorize Bonanza to collect the tax amount as a fee. For new sellers, this will be an automatic step in the booth activation process. For existing sellers, you can reauthorize your account here or in your booth settings.

If you accept payments through Stripe, no additional action is necessary, but please note that Bonanza will be collecting the tax amount as a fee when applicable.

2. Ensure you have specified the address from which your items ship.

The origin of the shipment is required in order to calculate the tax. You must include all of the following information:

• Street address
• City
• Postal Code
• Country

A valid ships from address is required to calculate sales tax. If you have more than one shipping location, we recommend using the address where the majority of your items ship from in this field. You can add additional ships from addresses by applying a shipping profile to your items that ship from other locations. Learn more about multiple "Ships From" addresses.

You can add or edit that address in your booth settings. Be sure to save any changes you make.

3. Let us know how you manage your shipping costs.

The tax rate depends on whether the buyer is charged the exact cost of the shipment, or if the seller is using flat rate shipping or other methods that involve marking up the shipping cost. You will need to let us know which method you use so we can collect the correct amount of tax on your orders. This information will not be shared with buyers.

There are three options to choose from:

• I cover the cost of shipping for my items
  • This is most similar to Free Shipping
• I use flat rate or marked up shipping costs
  • This is most similar to Flat Rate Shipping
• I charge buyers the exact amount that shipping costs
  • This is most similar to Calculated Shipping

You can only select one option. If you offer multiple shipping methods or use different shipping methods for different items, we recommend selecting the option that best aligns with how you most often set shipping prices. If you are unsure which of the available options is best for your business, we recommend consulting with a tax professional.

You can add or edit that setting in your booth settings. Be sure to save any changes you make.

What happens if I do not complete the required actions?

If a seller does not complete the reauthorization steps outlined above by December 6, 2021, Bonanza will place your booth on an administrative hold until the steps are completed so that we can collect and remit tax as required by law.

How will the sales tax be displayed on the payment I receive?

Your payment receipt will display a “Partner commission” or "Application fee" for the amount of the sales tax from the order total. This tax “fee” will be deducted from your payment account each day and then submitted to Bonanza, who will remit the tax payment to the state’s Department of Revenue on your behalf. 

What happens if the buyer is refunded?

The seller is responsible for issuing refunds, including the tax portion of the payment. If the buyer is refunded and Bonanza collected the sales tax, the payment processor will deduct the sales tax portion of the order from Bonanza and refund it back to the seller's account. If the buyer receives a partial refund, the payment processor will deduct a proportional percentage of the sales tax from Bonanza and refund it back to the seller's account.

For PayPal transactions:

• The prorated tax portion is given back to the seller immediately upon issuing the refund. 
• This should appear as a credit to the seller's account labeled as "Partner Commission" under the transaction details.
  • Similarly the seller would see Partner Commission as a debit when the original transaction is made to indicate that the sales tax amount was being sent to Bonanza

How is this different from how Bonanza has handled sales tax in the past?

Until these changes were enacted, Bonanza as a marketplace did not collect sales tax. Sellers had an option to set up sales tax rules in the Payments & Purchases tab of their booth, but we’ve always left it up to the seller to determine which tax rules apply to their business. Sellers were then responsible for remitting the tax funds to the relevant state.

This process will remain unchanged for any states or regions which do not require Bonanza as the marketplace to collect and remit tax.

What about collecting sales tax for buyers in other locations?

Currently, Bonanza does not collect and remit tax for buyers in the following states:

• Delaware
• Missouri (Bonanza will begin collecting for MO on January 1, 2023)
• Montana
• New Hampshire
• Oregon

We recommend all sellers consult a tax professional in their state, province or country to determine their tax obligations. You are able to create tax rules in your booth for all locations that Bonanza is not responsible for collecting tax from. Bonanza sellers are also welcome to use TaxCloud to manage their individual sales tax collection and remittance.

Learn more about using TaxCloud for your business.

Any tax rules created for Alabama, Alaska, Arizona, Arkansas, California, Colorado, Connecticut, Florida, Georgia, Hawaii, Idaho, Illinois, Indiana, Iowa, Kansas, Kentucky, Louisiana, Maine, Maryland, Massachusetts, Michigan, Minnesota, Mississippi, Nebraska, Nevada, New Jersey, New Mexico, New York, North Carolina, North Dakota, Ohio, Oklahoma, Pennsylvania, Rhode Island, South Carolina, South Dakota, Tennessee, Texas, Utah, Vermont, Virginia, Washington D.C., Washington State, West Virginia, Wisconsin, Wyoming, The European Union, the United Kingdom or Australia will be overridden at checkout so that the tax is collected by Bonanza.

Want to learn more about the new Marketplace Facilitator Laws? Check out this joint webinar with Bonanza and TaxCloud.