While economic nexus rules applicable to marketplace facilitators have largely stabilized in recent years, state tax authorities are increasingly asserting retroactive sales tax liabilities for prior tax periods. As a result, historical compliance exposure has become a significant area of risk for online marketplace facilitators, underscoring the importance of evaluating prior filing obligations and potential liabilities.
A pair of recent 2026 state court decisions from South Carolina and Wisconsin highlights a significant and converging trend in state sales tax jurisprudence affecting online marketplace platforms. In Amazon Services, LLC v. South Carolina Department of Revenue and StubHub, Inc. v. Wisconsin Department of Revenue, the courts examined the potential sales tax obligations of marketplace operators under statutory frameworks that predated marketplace facilitator laws.
Taken together, these decisions suggest that a marketplace platform’s active involvement in facilitated transactions may be sufficient to classify the platform as a taxable “seller” or a party “engaged in the business of selling,” thereby imposing an obligation to collect and remit sales tax on behalf of third-party sellers, even for tax periods preceding the enactment of marketplace facilitator statutes in South Carolina and Wisconsin.
In both cases, the courts rejected arguments that the platforms functioned merely as intermediaries or facilitators without independent sales tax collection obligations.
The decisions also undermine taxpayer arguments that the enactment of marketplace facilitator legislation implicitly foreclosed liability under prior statutory frameworks.
As a result, these rulings may influence how other states interpret and enforce pre-marketplace sales tax laws, particularly where existing statutes broadly define the persons responsible for collecting and remitting sales tax.
Case Backgrounds and the Pre-Marketplace Statutory Framework: South Carolina and Wisconsin
A Transactional Approach: Stubhub, Inc. V. Wisconsin Department of Revenue
In StubHub, Inc. v. Wisconsin Department of Revenue, 2026 WI App 7 (Jan. 13, 2026), the Wisconsin Court of Appeals reversed a circuit court decision and held that an online ticket marketplace was liable for more than $17 million in sales tax, penalties, and interest on ticket sales facilitated through its platform between 2008 and 2013.
The case arose after the Wisconsin Department of Revenue appealed the circuit court’s reversal of a Wisconsin Tax Appeals Commission decision, in which the Commission had concluded that StubHub qualified as “a person selling” admissions to recreational events under Wis. Stat. § 77.52(2)(a)(2) and was therefore responsible for collecting and remitting sales tax on transactions conducted through its marketplace during the audit period.
Notably, the transactions at issue occurred well before Wisconsin’s marketplace facilitator law became effective on January 1, 2020.
Accordingly, the Court of Appeals’ decision turned exclusively on the interpretation and application of Wisconsin’s pre-marketplace statutory framework, rather than on the obligations imposed under the state’s marketplace facilitator regime.
Wisconsin imposes sales tax on the sale of admissions to recreational events, with liability falling on the “seller.” Under Wis. Stat. § 77.51(17), a seller is defined as “every person selling.” Recognizing the circular nature of the statutory definitions of “sale” and “seller,” the Wisconsin Court of Appeals looked to both the statutory language and ordinary dictionary definitions to determine which party, as a practical matter, functioned as the seller in transactions conducted through StubHub’s platform.
The court ultimately concluded that StubHub qualified as “a person selling,” and therefore as a statutory seller responsible for collecting and remitting sales tax under Wisconsin’s pre-marketplace facilitator statutory framework. In essence, the court reasoned that identifying the entity responsible for effectuating the sale, the transfer of admissions in exchange for consideration, also identified the statutory seller.
In reaching that conclusion, the court emphasized StubHub’s central role in the sales transaction. StubHub processed each transaction, charged the purchaser’s payment method, deducted its service fees, and remitted the remaining proceeds to the ticket holder.
The court further observed that, from the purchaser’s perspective, StubHub was effectively the sole participant in the transaction, as purchasers interacted exclusively with StubHub throughout the purchasing process.
These facts, in the court’s view, demonstrated that StubHub’s involvement extended well beyond that of a passive intermediary and was sufficient to render it the seller for purposes of Wisconsin’s sales tax statute.
The Integral Party: Amazon Services, LLC v. South Carolina Department of Revenue
In Amazon Services, LLC v. South Carolina Department of Revenue, Case No. 2024-000625 (S.C. Mar. 18, 2026), the South Carolina Supreme Court considered whether Amazon was required to collect and remit sales tax on behalf of third-party sellers under the state’s pre-marketplace facilitator statutory framework.
The appeal arose from a decision of the South Carolina Administrative Law Court, which upheld the Department of Revenue’s assessment that Amazon was liable for sales tax on transactions facilitated through its marketplace. The assessment exceeded $12 million, including sales tax, penalties, and interest, and related to the first quarter of 2016, more than three years before South Carolina’s marketplace facilitator law became effective on April 26, 2019.
As in StubHub, the central issue was whether the state’s pre-marketplace sales tax statutes independently imposed collection and remittance obligations on an online marketplace operator, notwithstanding the subsequent enactment of marketplace facilitator legislation.
In a closely divided 3-2 decision, the South Carolina Supreme Court affirmed the Administrative Law Court’s determination that Amazon was required to collect and remit sales tax on behalf of third-party sellers under South Carolina’s pre-marketplace statutory framework.
Although the court acknowledged that Amazon may not have been the “seller” in the traditional sense, it concluded that Amazon was nevertheless “engaged … in the business of selling” within the meaning of S.C. Code Ann. § 12-36-910(A).
On that basis, the court held that Amazon was a person obligated to collect and remit sales tax on the transactions facilitated through its marketplace.
The South Carolina Supreme Court’s analysis differed materially from the reasoning employed by the Wisconsin Court of Appeals in StubHub. Rather than examining whether Amazon qualified as a statutory “seller,” the court concluded that the term “seller” was not the relevant inquiry because it does not appear in the operative statutory provision, S.C. Code Ann. § 12-36-910(A).
Instead, the court focused on whether Amazon was “engaged … in the business of selling” by deriving, directly or indirectly, a “gain, profit, benefit, or advantage” from transactions conducted through its marketplace.
In answering that question, the court examined the Business Solutions Agreement governing Amazon’s relationship with third-party sellers and concluded that Amazon exercised pervasive control over the sales process.
Under the agreement, Amazon regulated sellers’ ability to establish prices, prescribed requirements for listing products, controlled communications regarding sales, initiated payment processing through an affiliated entity, dictated communications between sellers and purchasers, administered returns, and controlled the disbursement of sale proceeds.
Based on these contractual responsibilities, the court determined that Amazon’s participation extended well beyond that of a passive intermediary. Rather, Amazon was so integral to the consummation of each marketplace transaction that no sale could occur through the platform without its active involvement.
Accordingly, the court concluded that Amazon was “engaged … in the business of selling” and therefore was responsible for collecting and remitting sales tax under South Carolina’s pre-marketplace statutory framework.
Courts Reject “Mere Facilitator” Treatment for Both Platforms
In both cases, the marketplace platforms argued that they functioned solely as passive intermediaries, facilitating transactions between independent third-party sellers and purchasers rather than acting as the taxable party responsible for the sale.
According to the platforms, the taxable transaction occurred exclusively between the third-party seller and the purchaser, with the platform serving only as a conduit. Both courts rejected that characterization.
Platforms’ Arguments Regarding Subsequent Marketplace Facilitator Laws Rejected
Both marketplace platforms argued that the subsequent enactment of marketplace facilitator legislation in South Carolina and Wisconsin demonstrated that no collection and remittance obligation existed under each state’s pre-marketplace statutory framework.
In other words, the platforms contended that the legislatures’ adoption of marketplace facilitator statutes reflected an acknowledgment that prior law did not impose sales tax collection responsibilities on marketplace operators.
Both courts rejected that argument, concluding that the enactment of marketplace facilitator legislation did not preclude liability under the states’ existing sales tax statutes.
In Wisconsin, the court concluded that the enactment of the state’s marketplace facilitator law reflected a clarification of existing law rather than a substantive change. The court noted that the Department of Revenue had initially presented the legislation to the legislature as a clarification of existing sales tax obligations.
Relying on the interpretive principles articulated in Recht-Goldin-Siegal Construction, Inc. v. Wisconsin Department of Revenue, 219 N.W.2d 379 (1974), the court further reasoned that the legislature’s decision to expressly add “marketplace providers” to the definition of “a person selling” did not necessarily create a new category of taxpayers.
Instead, the additional language represented a more specific enumeration of persons already encompassed within the existing statutory framework.
Accordingly, the court concluded that the January 1, 2020 amendment clarified, rather than altered, Wisconsin law regarding sales tax collection responsibilities. In South Carolina, the court rejected the law-change argument on narrower, but equally dispositive, grounds.
Rather than addressing whether the marketplace facilitator statute represented a substantive change or merely a clarification of existing law, the court emphasized that the Department of Revenue’s liability determination was based exclusively on the South Carolina Sales and Use Tax Act as it existed in 2016.
Although the Department issued its administrative determination in 2019, it did so before the General Assembly debated and enacted South Carolina’s marketplace facilitator legislation.
Accordingly, the court reasoned that the Department could not have applied the subsequently enacted marketplace facilitator statute retroactively; instead, it applied the statutory framework in effect during the audit period.
The South Carolina Supreme Court therefore found it unnecessary to decide whether the 2019 marketplace facilitator law changed existing law or simply clarified it.
Pre-Marketplace Periods May Expose Platforms Exercising Sufficient Control Over Transactions
Taken together, Amazon Services, LLC and StubHub, Inc. provide an important benchmark for tax practitioners advising online marketplace platforms.
Although each decision arose under the unique statutory framework of its respective state, both courts employed a functional, substance-over-form analysis that is likely to influence future disputes involving pre-marketplace sales tax liability.
Rather than accepting the platforms’ characterization of themselves as passive intermediaries, the courts closely examined the practical realities of their involvement in marketplace transactions, focusing on the degree of control they exercised over the sales process and the extent to which their participation was integral to the consummation of each sale.
Practitioners should be particularly mindful of the historical exposure these decisions present. By recognizing sales tax collection obligations under pre-marketplace statutory frameworks, both courts have demonstrated a willingness to impose liability for periods predating the enactment of marketplace facilitator legislation.
As a result, similar theories of liability may gain traction in other jurisdictions where broadly worded pre-marketplace statutes remain subject to judicial interpretation.
The decisions also underscore that no single defense strategy is likely to be effective across jurisdictions. Wisconsin’s analysis centered on whether the marketplace operator functionally acted as the statutory seller by effectuating the sale, while South Carolina focused more broadly on whether the platform was “engaged … in the business of selling” because its participation was integral to the transaction.
These complementary, yet distinct, analytical frameworks provide multiple avenues by which taxing authorities may seek to impose liability under pre-marketplace law.