After U.S. Supreme Court Case South Dakota v. Wayfair, Inc. made fundamental policy changes in the way states collect internet-based sales and uses taxes, the recent emergence of Marketplace Facilitators across the nation has enhanced states’ ability to gather more revenue and more closely monitor eCommerce. While at the same time, it is great for direct sales in the wine industry by simplifying reporting for the sellers.  

In general, a Marketplace Facilitator contracts with marketplace sellers to facilitate the sale of their products through an electronic or physical marketplace, which varies by state in terms of regulations, tax remittance, and licensing requirements. Some functions are universal, such as payment processing, customer service activities, and providing an infrastructure for ecommerce transactions. Commonly known Marketplace Facilitators are Amazon, Etsy, and eBay.  

Marketplace Facilitators in the wine industry can quickly remove the criticism from some corners of the industry that taxes are not collected and paid on transactions. All transactions through these platforms are taxed whether the seller would have met the minimum sale thresholds for a state or not. They also create a simplified audit trail and make it seamless and easy for state revenue agencies to collect taxes, cutting down thousands of returns they have to deal with. 

As a Marketplace Facilitator, Vinoshipper routinely helps clients manage the regulatory compliance, process transactions, while also collecting and remitting sales and use taxes on their behalf. Wineries are thrilled to use our platform to manage the details and pay the proper authorities while they focus on more interesting projects, such as building relations with their customers and selling more product. Removing the need to worry about the current 3,814 sales tax amounts over the 2.6 million ZIP codes. 

The ability to sell wine directly has opened new markets for wineries and given consumers a greater selection of products to choose from. The growth in direct-to-consumer sales has effectively removed obstacles created 100 years ago by prohibition-era regulations.   

 As the ease of online sales helps small producers sell more wine directly to consumers, Marketplace Facilitators are creating new pools of revenue that would not otherwise be accessible to jurisdictions. The extra regulatory rigor that accompanies a Marketplace Facilitator should give state policymakers confidence that technology and modernization are beneficial and safe. For small, independent wineries that have new ways to reach new customers legally and efficiently, the future is growing brighter.

For example, the District of Columbia has started collecting sales taxes from a new class of online transactions that have collectively raised the threshold to require taxation. Without a Marketplace Facilitator to create the opportunity for these sales to be tracked, along with the corresponding taxes, they would be invisible and unpaid to the agency. 

It will be only a matter of time that state agencies fully recognize the use of the marketplace facilitator to collect and remit excise taxes on wine sales as well, again cutting down on thousands of returns and reducing the tax collection burden on these transactions. Other depts have already implemented additional fee and tax collection such as Colorado with their recently implemented transportation fee. 

 In a related series of articles, Vinoshipper has identified four key regulatory issues for states, that is Age Verification, Licensing, Tax Collection, and Auditability of transactions (ALTA). Transparency and accountability are paramount for regulators to track compliance and ensure that businesses involved in direct shipping are following the complex maze of state, local, and federal laws that intend to keep communities safe. Vinoshipper is proud to lead the way with a single solution that helps producers and regulators work together to modernize our industry. After all, the original intent of these departments was the collection of taxes.

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