More States Add Cryptocurrency Twist to Marketplace Sales Tax Laws

Online marketplaces that allow or plan to allow customers to make purchases with virtual currency may unknowingly be setting themselves up to collect sales tax in more than a dozen states.

At least 16 states have a special provision in their marketplace facilitator laws that put marketplaces on the hook for sales tax collection if the business provides the option to pay with virtual currency to customers, according to Bloomberg Tax data. Marketplace facilitator laws require businesses like Amazon.com Inc. and Etsy Inc. to collect and remit sales and use tax on behalf of their vendors if they cross a specific threshold in the state.

An example of such a currency could be Facebook’s newly announced Libra cryptocurrency. Another is “credits” that can be purchased with cash and then used to buy upgrades and merchandise within video games through systems like Microsoft Corp.’s Xbox or Sony Corp.’s PlayStation consoles, according to Mark Nebergall, president of the Software Finance…