200 Transactions, Not $100K: Why Michigan's Dual Nexus Test Catches Etsy and eBay Sellers Who Think They're Below the Threshold

How Michigan's 200-Transaction Prong Works for Marketplace Sellers

Michigan enacted its economic nexus provisions following the 2018 South Dakota v. Wayfair decision. The threshold is straightforward: if you exceed $100,000 in gross sales or 200 separate transactions delivered to Michigan addresses during the previous calendar year, you have Michigan economic nexus. The "or" is critical. You do not need to satisfy both conditions — either one alone is sufficient.

For sellers on Etsy and eBay, the 200-transaction prong is where the math gets uncomfortable. Consider a typical Etsy seller specializing in handmade candles at $24 average order value. That seller needs only 200 Michigan orders — $4,800 in total revenue — to trigger nexus. An eBay vintage clothing seller averaging $38 per item crosses at 200 transactions and $7,600 in revenue. These are not edge cases. High-volume marketplace sellers routinely exceed 200 transactions in a single state while keeping revenue well below $100K.

The question is: does crossing 200 transactions matter if Etsy or eBay already collects Michigan sales tax? The answer depends entirely on whether you have any sales outside those platforms.

Real-Dollar Example: Etsy Seller at $60K Revenue and 250 Transactions

Take a concrete scenario. Sarah runs an Etsy shop selling handmade pottery. In 2025, she shipped 250 orders to Michigan addresses, totaling $60,000 in gross revenue. Her average order value is $240 — she sells fewer but higher-priced items. She also operates a Shopify store where she sells seconds and clearance items, generating $8,000 from 40 Michigan orders.

Here is how the nexus calculation works:

Sarah's combined revenue is $68,000 — well below the $100K dollar prong. But her combined transaction count is 290, exceeding the 200-transaction prong. She has Michigan economic nexus. Etsy collects on the 250 Etsy orders. Sarah must register with the Michigan Department of Treasury and collect 6% on every Shopify order shipped to Michigan. On $8,000 in Shopify sales, that is $480 in tax she is personally responsible for collecting and remitting.

Without the Shopify store, Sarah would still have nexus (290 transactions exceeds 200), but 100% of her sales would flow through Etsy's facilitator coverage. The moment she adds a direct channel, the gap in that coverage becomes her liability.

eBay's Facilitator Certification in Michigan: What Counts and What Doesn't

eBay began collecting and remitting Michigan sales tax as a marketplace facilitator on January 1, 2020 — the same date Michigan's marketplace facilitator law took effect. Unlike some states where eBay's certification was delayed (creating gap periods where sellers carried direct liability), Michigan had no lag. From day one of the law, eBay was collecting.

This matters for historical liability. If you sold on eBay into Michigan before January 1, 2020, eBay was not collecting on your behalf. Any sales exceeding the $100K or 200-transaction threshold in 2019 or earlier created a direct collection obligation on you as the seller. Michigan's statute of limitations for sales tax assessments is four years from the date the return was due, meaning pre-2020 exposure windows are closing but may not have fully expired for sellers who never registered.

For current sales, eBay's facilitator coverage in Michigan is comprehensive. eBay collects the 6% tax on all orders shipped to Michigan addresses, including auction-format and fixed-price listings, Buy It Now transactions, and items sold through eBay's managed payments system. The coverage gaps that exist in other states for eBay sellers are largely absent in Michigan because of the flat 6% rate with no local tax variation.

Cross-Platform Aggregation: Etsy + eBay + Shopify and the Transaction Test

The most common blind spot for multi-channel sellers is how Michigan counts transactions across platforms. Michigan does not care where the transaction occurred — it counts every individual sale delivered to a Michigan address, regardless of platform.

Consider a seller operating on all three platforms:

Total revenue: $65,000 (below $100K). Total transactions: 215 (above 200). Nexus is triggered by the transaction prong. Etsy and eBay collect on their respective orders. The seller owes 6% on the $15,000 in Shopify sales where no facilitator operates — $900 in Michigan sales tax collected from customers and remitted to the state.

No single platform pushed this seller over 200 transactions. The aggregation across Etsy (95) + eBay (70) + Shopify (50) is what crosses the line. A seller monitoring each platform in isolation would see 95, 70, and 50 — all individually well below 200 — and conclude incorrectly that no nexus exists.

The Canadian Seller Scenario: GTA Resellers Shipping to Michigan

Michigan shares a border with Ontario, and a significant number of Canadian sellers — particularly in the Greater Toronto Area — sell on Etsy and eBay to Michigan buyers. The marketplace facilitator law protects these sellers from direct Michigan sales tax obligations on facilitated orders, but the protection has the same limits as for any other seller.

Consider a Toronto-based Etsy seller with $85,000 CAD (approximately $62,000 USD) in Etsy sales to Michigan buyers and $25,000 CAD (approximately $18,300 USD) through a personal Shopify store. The threshold calculation uses US dollars and counts all Michigan-delivered transactions:

The USD revenue (~$80,300) is below the $100K dollar prong, but 395 transactions far exceeds the 200-transaction prong. Etsy collects on the 310 facilitated orders. The Canadian seller must register with the Michigan Department of Treasury and collect 6% on the 85 Shopify orders — approximately $1,098 USD in Michigan sales tax.

Two critical points for Canadian sellers: First, Canadian GST/HST obligations on cross-border sales to US customers are a separate matter entirely. Goods exported from Canada are generally zero-rated for GST/HST purposes, but that does not affect your Michigan sales tax obligation. Second, Michigan does not grant a credit or offset for Canadian taxes paid — the obligations are completely independent. A Canadian seller who crosses the 200-transaction threshold and has direct-channel Michigan sales must navigate both the US state tax system and Canadian export rules simultaneously.

Michigan Registration for Marketplace-Only Sellers Who Hit the Transaction Prong

If 100% of your Michigan sales flow through Etsy, eBay, Amazon, or another registered marketplace facilitator, you do not have a direct collection obligation even if you exceed both the $100K and 200-transaction thresholds. The facilitators handle collection and remittance on every order. In this narrow scenario, Michigan does not require you to register.

But this safe harbor evaporates the moment you add a direct sales channel. Here is the registration process for sellers who cross the threshold and have non-facilitated sales:

1. Register with the Michigan Department of Treasury. File Form 518 (Registration for Michigan Taxes) online through Michigan Treasury Online (MTO). Out-of-state and international sellers register as remote sellers. There is no fee to register.
2. Determine your filing frequency. Michigan assigns monthly, quarterly, or annual filing based on your expected tax liability. Most small-to-mid-volume sellers start on quarterly filing. Returns are due on the 20th of the month following the reporting period.
3. Collect 6% on all direct-channel Michigan orders. Configure your Shopify store (or other direct platform) to charge Michigan's flat 6% rate on orders shipped to Michigan addresses. Because Michigan has no local tax variation, this is simpler than most states.
4. File returns and remit tax. Report only the tax you collected on direct-channel sales. Do not report or remit marketplace-facilitated sales — Etsy, eBay, and other facilitators file their own returns covering those transactions.
5. Monitor the prior-calendar-year lookback. Michigan uses a prior calendar year test, not a rolling 12-month window. If your 2025 Michigan sales cross either prong, you have nexus for all of 2026. If 2025 falls below both thresholds, your nexus may lapse — but you should continue monitoring rather than assuming the obligation has ended.

What Michigan Etsy and eBay Sellers Should Do Now

Your compliance obligations depend on your channel mix. Work through these steps:

• Pull your prior-year Michigan transaction count from every platform. Etsy, eBay, Amazon, Shopify, and any other channel. Remember: Michigan uses the prior calendar year, so you are looking at full-year 2025 data to determine 2026 obligations.
• Check both prongs independently. If revenue exceeds $100K, you have nexus regardless of transaction count. If transactions exceed 200, you have nexus regardless of revenue. The "or" operator means you must monitor both.
• Identify non-facilitated sales. If you have any direct-channel revenue (Shopify, personal website, craft fairs, wholesale), these are the sales where you must collect. Facilitated sales through Etsy and other marketplace facilitators are handled by the platform.
• Register before you start collecting. Michigan requires registration before you begin charging sales tax. Do not start collecting without a valid registration — unauthorized collection creates its own compliance issues.
• Set up 6% collection on direct channels. Michigan's flat rate makes configuration straightforward. Ensure your Shopify or other platform charges 6% on all Michigan-shipped orders. No rate lookup tables are needed.
• File returns on schedule. Late filing carries a 5% penalty per month (up to 25%) plus interest. Even if the dollar amount is small, consistent filing avoids compounding penalties.