E-commerce taxes and accounting

    E-commerce Taxes and Accounting: A CPA Firm's Guide for Online Sellers

    Online sellers handle five things most small businesses never see: platform payouts, marketplace sales tax, Form 1099-K, inventory with landed cost, and import tariffs. This guide covers what changed in 2025 and 2026, how each platform works, and where a CPA firm fits. We work with sellers nationwide.

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    • Last reviewed October 18, 2026
    • Sources linked below

    What taxes and accounting does an online seller need to handle?

    Online sellers owe income tax on profit, sales tax where they have nexus, and must reconcile Form 1099-K, inventory and import tariffs to their books. As of October 2026, 1099-K applies above $20,000 and 200 transactions. Your Virtual CPA, a licensed CPA firm, handles e-commerce tax and accounting nationwide. Request a free consultation.

    What changed in 2025–2026 (as of October 2026)

    • 1099-K threshold back to $20,000 and 200 transactions. The One Big Beautiful Bill Act retroactively reinstated the old threshold for payment platforms and marketplaces (IRS IR-2025-107, Oct. 23, 2025). Your income is still taxable without a form. See 1099-K for online sellers.
    • De minimis duty-free treatment suspended. The $800 exemption was suspended for all countries from 12:01 a.m. on August 29, 2025 (Executive order, July 2025). The suspension was continued on February 20, 2026 and CBP made it indefinite for non-postal shipments by rule in June 2026. The statute ends de minimis on July 1, 2027 (CBP interim final rule, June 24, 2026). See tariffs, landed cost and COGS.
    • IEEPA tariffs struck down. On February 20, 2026 the Supreme Court held that IEEPA does not authorize tariffs (Learning Resources, Inc. v. Trump, No. 24-1287). Section 232 and Section 301 duties were not part of the ruling.
    • Refunds through CBP's CAPE tool. CBP began taking IEEPA refund claims in ACE on April 20, 2026, in phases. Only the importer of record or its customs broker can file, and refunds go by ACH (CBP IEEPA duty refunds). The tax treatment is still unsettled. See is a tariff refund taxable?
    • New Section 301 tariffs from July 24, 2026. USTR imposed duties of 10% or 12.5% on goods from 60 economies over forced labor import policies (USTR, July 23, 2026). Check your supplier country and product exclusions.
    • AI shopping channels. Shopify's Agentic Storefronts list products in AI assistants such as ChatGPT and Microsoft Copilot (Shopify Winter '26 Edition). For tax, the question is who is the seller and who takes payment. See selling on ChatGPT and AI agents.

    Platform by platform: what each one handles and what you still own

    Shopify. Shopify is your storefront, not a marketplace facilitator. It can calculate sales tax at checkout, but you register, collect and file in states where you have nexus. Shopify Payments issues Form 1099-K when you pass the threshold. Payouts arrive net of fees, refunds and reserves. See CPA for Shopify stores, Shopify payouts reconciliation and Shopify bookkeeping.

    Amazon (FBA and FBM). Amazon collects sales tax as a marketplace facilitator. FBA inventory stored in other states can still raise state income or franchise tax questions, and reimbursements for lost or damaged units need their own entries. See Amazon seller accounting, FBA inventory nexus and Amazon reimbursements.

    TikTok Shop. TikTok Shop acts as a marketplace facilitator for sales tax in facilitator states. Sellers may get a 1099-K, and affiliates and creators may get other 1099 forms. See TikTok Shop taxes.

    Etsy. Etsy collects sales tax on marketplace orders in facilitator states. Materials you build products from belong in cost of goods sold, and the hobby versus business question matters for small shops. See Etsy seller taxes.

    eBay. eBay collects sales tax as a marketplace facilitator and issues 1099-K forms under the federal threshold. Sellers who also sell personal items need to separate those sales from business sales. See 1099-K for online sellers.

    Walmart Marketplace. Walmart collects sales tax on marketplace sales in facilitator states. Settlement reports work like Amazon's: gross sales less referral fees, fulfillment fees and returns. Reconcile each settlement to the bank deposit.

    WooCommerce. WooCommerce is software on your own website. It does not collect or remit sales tax for you. You are the seller, so registration, collection and filing are yours once you have nexus. Your payment processor issues the 1099-K.

    Faire. Faire is a wholesale marketplace. Sales to retailers who buy for resale are generally exempt from sales tax when you have a valid resale certificate on file, under each state's rules. Faire commissions and payment terms make payouts lag behind orders, so wholesale revenue needs its own reconciliation.

    For the sales tax side across all of these, see e-commerce sales tax and economic nexus.

    The problems we see most

    • Wrong cost of goods sold. Inventory expensed when bought, or tariffs and freight left out of unit cost. See inventory accounting and landed cost.
    • Books built from deposits. Revenue recorded as net payouts, so fees, refunds and reserves disappear. See payouts reconciliation.
    • Unknown state exposure. Sales tax nexus from your own site, and income tax questions from FBA inventory. See multi-state nexus.
    • 1099-K higher than profit. The form reports gross payments, not what you earned.
    • Profitable on paper, short on cash. Cash goes into inventory and tariff payments before sales come in. See fractional CFO for e-commerce.
    • Entity and owner pay. When an S corp election makes sense with inventory. See LLC or S corp for e-commerce.
    • Drop-ship sales tax. Suppliers charging sales tax because you have no resale certificate on file. See dropshipping taxes.
    • Lender, investor or buyer requests. A bank asks for reviewed statements, or a buyer starts diligence. See audit and review and selling your business.

    All e-commerce guides:

    E-commerce glossary

    • Landed cost: The full cost to get a product into your warehouse: supplier price plus inbound freight, insurance, duties and tariffs, and customs brokerage. It becomes cost of goods sold when the unit sells.
    • Marketplace facilitator: A platform, such as Amazon, Etsy, eBay, Walmart or TikTok Shop, that state law requires to collect and remit sales tax on the sales it facilitates for third-party sellers.
    • Economic nexus: A state's right to make a remote seller collect sales tax based on sales into the state alone, often $100,000 in sales. It came from South Dakota v. Wayfair (2018).
    • Importer of record: The party legally responsible for an import entry and its duties. It is the party that can claim a CBP duty refund. With DDP shipping it may be your supplier, not you.
    • Merchant of record: The business that sells to the customer, takes payment in its name and is responsible for sales tax, refunds and chargebacks.
    • Reserve: Money a payment processor holds back from payouts to cover possible refunds and chargebacks. It is still your money, not a fee (Shopify reserves).

    How it works with us

    Best for: Shopify, Amazon, TikTok Shop, Etsy and multichannel brands that hold inventory, import goods, sell in many states or are planning financing or a sale.

    1. Free initial consultation. Tell us your channels, how you source and ship, and what is not working in your books.
    2. Fees quoted upfront, in writing. Transparent, fair fees in an engagement letter before work starts.
    3. Books that tie out. Gross sales, fees, refunds and reserves by channel, with inventory at landed cost.
    4. Tax work. Income tax returns, planning, sales tax nexus review and 1099-K reconciliation.
    5. Reporting. Margin by channel, cash planning, and financial statements for lenders, investors or buyers.

    See our E-commerce accounting services, or compare options in CPA firm vs online bookkeeping service.

    CPA firm vs software vs bookkeeper: who handles what

    TaskE-commerce software / appsBookkeeperCPA firm
    Pull orders, fees and payouts into the booksYes, automatedSets up and reviewsReviews the setup and fixes errors
    Payout clearing and bank reconciliationPartialYesYes, and resolves differences
    Inventory at landed cost, COGS and tariffsTracks quantities and entered costsRecords entriesSets the costing method and tax treatment
    Sales tax nexus decisionsFlags thresholdsNoYes, plus registration or voluntary disclosure
    Sales tax filingSome apps fileSometimesYes, or reviews what apps file
    1099-K to books reconciliationNoSometimesYes
    Income tax returns and tax planning (S corp, entity)NoNoYes
    Reviewed or audited financial statements for lenders or buyersNoNoYes (licensed CPA firm only)

    Expert CPAs. Personal attention.

    Selling on Shopify, Amazon, TikTok Shop or Etsy? Bring your platform reports to a free initial consultation and talk to a CPA about your books, taxes and inventory.

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    Frequently asked questions

    Software is enough to pull orders, fees and payouts into your books. You need a CPA when the questions need judgment: how to cost inventory and tariffs, where you owe sales or income tax, whether an S corp election makes sense, and when a lender or buyer wants reviewed or audited financial statements.

    As of October 2026, payment platforms and marketplaces file Form 1099-K only when you have more than $20,000 in payments and more than 200 transactions (IRS IR-2025-107). Some states use lower thresholds. All your sales income is taxable whether or not you get a form.

    Yes. Duties and tariffs on goods you import are part of what the inventory cost you, along with inbound freight and customs brokerage. They become cost of goods sold when the goods sell. Tariffs on goods still on your shelf stay in inventory until then.

    Often, but it depends. If the duty already reduced your taxable income through cost of goods sold, a refund is generally income when you receive it. If the goods are still in inventory, the refund usually reduces their cost. Interest CBP pays is taxable interest income. As of October 2026 we have not found IRS guidance specific to IEEPA refunds.

    In states with marketplace facilitator laws, yes, on sales made through that marketplace. You still owe sales tax on sales through your own Shopify or WooCommerce store once you have nexus in a state. Marketplace collection does nothing for your income tax.

    Payouts are net amounts. Shopify Payments deducts processing fees, refunds, chargebacks and any reserve before it sends money to your bank. Your books should record gross sales and each deduction separately, then clear the payout against the bank deposit.

    Yes. Buyers usually test whether revenue ties from the platform to payouts to the bank, whether gross margin includes full landed cost, whether add-backs are supported, and whether you have sales tax exposure. Clean books 12 to 24 months before a sale help.

    Yes. Your Virtual CPA is a licensed CPA firm that works with online sellers nationwide. Everything runs virtually, from the first consultation through tax returns and monthly reporting.
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