Marketplace facilitators like DoorDash connect buyers with sellers. Laws have shifted certain tax remittance responsibilities from merchants to these platforms in many areas, affecting the way transactions are processed and taxes are handled. In the article below, we’ll walk through specifics on marketplace facilitators, specific jurisdictions they relate to, and how this relates when it comes time to report your taxes.
What is a marketplace facilitator?
In general terms, a marketplace facilitator is a platform like DoorDash that connects buyers and sellers to help facilitate the sale of various goods and services, including food, drinks, groceries, and other retail items.
How do marketplace facilitator laws impact tax?
In some jurisdictions, there are laws that change the party that is responsible for remitting tax on sales made between buyers and sellers on a marketplace facilitator’s platform. These laws shift the responsibility for tax remittance from merchants to DoorDash, as the marketplace facilitator. In these jurisdictions, listed below, DoorDash remits directly to the tax authorities the tax on the merchant’s sales made through the DoorDash platform.
In which jurisdictions does DoorDash remit tax directly to the tax authorities as a marketplace facilitator?
DoorDash is registered to collect and remit tax directly to the tax authorities as a marketplace facilitator on orders made through the DoorDash platform in the following jurisdictions:
Marketplace Facilitator List
How does DoorDash handle local taxes in marketplace facilitator states?
DoorDash remits all local taxes, such as food and beverage taxes imposed by counties and cities, to the tax authorities in the marketplace facilitator jurisdictions listed above, except for certain local taxes imposed by local jurisdictions in the following states with an implementation date of 5/1/24:
How do the marketplace facilitator laws affect my payouts?
Merchant payouts for sales made in the jurisdictions listed in the Marketplace Facilitator List will not include subtotal tax, except for certain local taxes, for those sales because DoorDash collects the subtotal tax from the customer and remits the subtotal tax directly to the tax authorities.
Where can I view the tax that DoorDash remitted directly to the tax authorities for my orders?
Merchants can view the tax that DoorDash remitted directly to the tax authorities in various reports available on the Merchant Portal.
To view the tax that DoorDash remitted directly to the tax authorities for each order, see the Transactions report, column “Subtotal Tax Remitted by DoorDash to Tax Authorities”.
To view the tax that DoorDash remitted directly to the tax authorities for each payout, see the Payouts report, column “Subtotal Tax Remitted by DoorDash Tax Authorities”.
Please see How to Utilize DoorDash Reporting to download Transactions and Payouts reports from the Merchant Portal.
For which orders will DoorDash collect and remit tax directly to the tax authorities as a marketplace facilitator?
In jurisdictions where DoorDash is required to collect and remit tax as a marketplace facilitator, DoorDash will collect and remit tax directly to the tax authorities on applicable sales facilitated in the jurisdictions listed above for Marketplace, Self-Delivery, Flexible Fulfillment, and Online Ordering. DoorDash does not collect and remit tax directly to the tax authorities for Drive On-Demand.
Who is responsible for setting tax rates on my menu items?
DoorDash is responsible for setting tax rates on merchant menu items in the jurisdictions in the Marketplace Facilitator list. Merchants are responsible for setting tax rates on merchant menu items in all other jurisdictions. For more information, head to How to Update the Tax Rates of Your Menu Items and Store.
How does the process differ for point-of-sale (POS) integrations?
There is no difference in tax payouts and tax remittance for POS integrations. DoorDash continues to handle all tax calculations where applicable. Merchants with POS integrations can access the Merchant Portal for reporting information. For more information, head to How to Update the Tax Rates of Your Menu Items and Store.
Can DoorDash send a letter to me confirming that DoorDash remits tax directly to the tax authorities for my store?
Yes, please contact DoorDash Merchant Support to submit a request.
How should I report my taxes?
DoorDash is unable to provide tax or legal advice. DoorDash recommends that merchants contact a tax professional.
What if I’m located in Puerto Rico?
As a marketplace facilitator, DoorDash remits tax directly to the tax authorities for all Puerto Rico merchants effective April 1, 2021. DoorDash’s Form SC 2918 “Certificado de Registro de Comerciante” is available here.
What if I’m located in Canada?
For information on the marketplace facilitator laws in Canada, please see the Marketplace Facilitator Guide for Canada.
What if I’m located in Australia or New Zealand?
Australia and New Zealand do not have marketplace facilitator laws that impact sales made through the DoorDash platform. Merchants in Australia and New Zealand are responsible for remitting all tax on sales made through the DoorDash platform.
Marketplace facilitator laws have changed the landscape of online sales, making platforms like DoorDash responsible for tax remittance in select jurisdictions. This shift has implications for merchant payouts and tax compliance, emphasizing the need for adaptability and awareness in the evolving e-commerce environment. This is why it’s important to speak with a tax professional to make sure you’re adhering to the current legal standards.
Still have questions? Check out How to Access and Understand Your Tax Invoices or contact DoorDash Merchant Support.
