This document will cover tax related charges applied to every product sale across the [dephoro] Marketplace. Make it a point to read through this document in full. We want you to succeed on this Marketplace, and understanding the numbers that go into it is vital. Failure to account for these charges could turn a profit into a potential loss.
How Taxes Apply to Marketplaces #
[dephoro] Marketplace, being an online marketplace, is subject to a special set of tax laws. To remain in compliance with this set of laws, [dephoro] will collect and remit all taxes on behalf of its vendors. To accomplish this, we use a world-class third-party tax service, which is integrated directly with our marketplace.
As a “marketplace facilitator” we must track sales across every state we sell to. Each state has a unique sales threshold that triggers “nexus.” Prior to nexus being established in any given state, all orders to said state will not have sales tax applied. When that state crosses the nexus threshold, sales tax shall be applied to all orders going to that state. We will post an announcement, visible from the merchant dashboard, any time nexus is established in a state.
Required Documents #
In order to sell on the [dephoro] Marketplace, you must provide us with information and documentation as required by the IRS. Upon registration, our third-party tax company (Avalara) will send you an e-mail containing the registration and verification process information. Whereas you can populate your store with products as soon as you register as a merchant, you cannot sell those products on the [dephoro] Marketplace without completing this tax system integration process in full. It verifies you as a merchant (so we know you are who you say you are) and also enables us to legally handle the taxes for your sales on our marketplace. The tax system registration is of vital importance and should be completed as soon as possible.
NOTE: If you do not receive a tax system integration e-mail after registering as a merchant, please contact us so we can re-send the message. Also, be sure to check your spam folder!
How We Calculate Taxes #
The per-product tax is determined by the product’s category as well as the location of the buyer. It is of vital importance that any and all products you list are categorized accurately. If you incorrectly categorize an item, we will incorrectly tax it and this can have serious long-term and short-term effects. To put into perspective how specific these tax rules are, refrigerated candy is taxed differently than non-refrigerated candy and we have to remain in compliance with extraordinarily specific details like that. This is all governmentally regulated so please, categorize all of your products correctly.
When an order is placed, our systems check where the order originated from, and apply the tax associated with that location to the sale according to the product’s category. For this reason, we have a detailed and specific list of categories. If you would like any clarifications on what category a specific item should be placed in, leave it in “Uncategorized” and contact us! We will work together to place said product properly.
