If you sell into a state from outside it, you generally must register and collect that state’s sales tax once your sales cross an economic nexus threshold, and if you sell through a platform like Amazon, eBay, or Etsy, the platform itself handles collection on those transactions under marketplace facilitator laws. Those two rules — economic nexus and marketplace facilitator laws for remote sellers — set the compliance framework in nearly every sales-tax state. The 2018 Supreme Court decision in South Dakota v. Wayfair, Inc. ended the old physical-presence requirement and held that substantial economic activity in a state is enough to justify tax collection duties.1Legal Information Institute. South Dakota v. Wayfair, Inc. What that means in practice depends on where you sell, how much, and through what channels.
When You Cross the Line
Economic nexus means selling enough into a state creates a tax obligation there, regardless of where you sit. The most common trigger is $100,000 in gross revenue from sales delivered into the state during a defined measurement period. A shrinking group of jurisdictions also sets a transaction-count alternative, typically 200 separate sales, and crossing either the dollar or the transaction line gives you nexus.
The trend is strongly away from the transaction test. As of early 2026, roughly 16 states and territories still use a 200-transaction alternative. California, Texas, New York, Florida, Illinois, Indiana, and South Dakota have all dropped their transaction thresholds, leaving revenue as the sole trigger. This matters if you sell low-priced goods in high volume: a pattern of 500 sales of $10 items used to create nexus in most states, but today it only triggers obligations where transactions are still counted.
Measurement periods vary too. Some states look at the prior calendar year only. Others look at either the current or the prior calendar year, so a burst of sales in January can create an obligation immediately rather than the following year. Once you cross, most states expect you to begin collecting within 30 to 60 days, though registration timelines differ by jurisdiction.
Five states have no statewide sales tax at all: Alaska, Delaware, Montana, New Hampshire, and Oregon. Alaska is a partial exception because local jurisdictions there impose sales taxes on remote sellers through the Alaska Remote Seller Sales Tax Commission.
What Sales Count Toward the Threshold
Whether any particular sale pushes you closer to the $100,000 line depends on how the state defines its threshold. States use one of three measurement bases, and the difference can decide whether you have nexus at all.
- Gross sales. Everything counts. Taxable sales, exempt sales, and sales for resale all add together.
- Retail sales. Sales for resale drop out, but other exempt sales (such as food or clothing in states that exempt those categories) still count.
- Taxable sales. Only transactions that actually generate tax liability are included. Exempt sales and resale transactions are excluded.
The Streamlined Sales Tax Governing Board publishes guidance on these distinctions for its member states.2Streamlined Sales Tax Governing Board. Remote Seller Thresholds Terms A seller with $80,000 in taxable sales and $30,000 in exempt sales has nexus in a gross-sales state but not in a taxable-sales state. Shipping and handling charges generally count as part of the selling price, so itemizing delivery fees separately doesn’t reduce your threshold exposure.
Most states also include marketplace sales in the calculation, even when the platform collects the tax. California, for example, requires sellers to count all sales delivered into the state, including sales facilitated through a marketplace, when measuring against its threshold. The reasoning is that the seller’s total economic footprint in the state matters for determining nexus, regardless of who actually remits the tax on any given transaction.
What the Marketplace Collects and What You Collect
Marketplace facilitator laws exist in nearly every sales-tax state and reassign the compliance burden. Under these laws, the platform that lists products, processes payments, and arranges delivery is responsible for collecting and remitting sales tax on third-party sales. If you sell exclusively through Amazon or Etsy, the platform handles tax collection for those transactions in states with facilitator laws.
This is the single biggest simplifier available to small sellers. A business that runs entirely through one or two major marketplaces may have zero direct collection obligations even while shipping into dozens of states. The platform calculates the tax, charges the buyer, and files the returns.
The complication starts when you also sell through your own website, at craft fairs, or through any channel the marketplace doesn’t control. Those direct sales are yours to track, register for, and collect on.
The genuinely tricky part is the interaction between marketplace sales and direct-sale nexus. Some states count your marketplace sales toward your nexus threshold for direct sales. So even if your own website only generates $20,000 in sales to a particular state, your combined volume through Amazon and your site might push you over $100,000. In those states you would need to register and collect tax on your direct sales even though the marketplace already collected on the platform transactions. Other states exclude marketplace-facilitated sales from the threshold entirely, so only your direct sales matter. Getting this wrong in either direction causes problems: collecting tax that isn’t owed, or under-collecting and facing penalties later.
Registering Once You Have Nexus
Once you determine you have nexus in a state, registration is the next step. Most states handle this through their Department of Revenue or equivalent agency’s online portal. You will typically need:
- Federal Employer Identification Number (FEIN). The primary business identifier on virtually every state application.
- Legal business name and structure. As registered with the IRS, including entity type (LLC, corporation, sole proprietorship).
- Officer or owner information. Names, Social Security numbers, and contact details for responsible parties.
- NAICS code. The North American Industry Classification System code that categorizes your primary business activity.
- Estimated sales volume. Many states ask for projected monthly or annual sales to determine your initial filing frequency.
Sellers with obligations in several states can save time by using the Streamlined Sales Tax Registration System, which allows a single application to register in all participating member states at once.3Streamlined Sales Tax Governing Board. Sales Tax Registration SSTRS Not every state participates, but the system covers enough jurisdictions to be a logical starting point before handling the rest individually.
Most states issue seller’s permits at no cost. A handful charge small application fees, generally under $100, and some may require a refundable security deposit or surety bond for new registrants. The bigger hidden cost is time. Registering individually in 20 or 30 states, each with its own portal and quirks, can take days of administrative work.
Filing After You Register
Registration creates an ongoing obligation to file returns on the schedule the state assigns, even in periods when you owe nothing. This catches many sellers off guard. If a state assigns you a monthly filing frequency, you must submit a return every month, including months with zero taxable sales. Failing to file a zero-dollar return can trigger penalties just as surely as failing to file when tax is owed.
Filing frequency usually depends on your sales volume. States typically assign monthly filing to higher-volume sellers, quarterly filing to mid-range sellers, and annual filing to those with minimal activity. The revenue tiers vary by state, but the assignment happens at registration based on your estimated sales, and the state may adjust it later.
Nearly all states require electronic filing and payment through their online portals. After submitting a return, you receive a confirmation that serves as your proof of compliance. Keep every confirmation in a digital archive. Auditors working three or four years after the fact will want to see them.
Late filing penalties vary. They commonly start at the greater of a flat dollar amount (often $50) or a percentage of the tax due, typically around 10%, and can escalate if the state sends a notice and the balance remains unpaid, reaching as high as 25% in some jurisdictions. Interest accrues on top. Build return due dates into your calendar the moment you receive a filing frequency assignment, and treat zero-tax returns with the same urgency as returns with a balance due.
Exemption and Resale Certificates
Not every sale that counts toward your nexus threshold is actually taxable. Buyers may present exemption certificates claiming purchases are for resale, for use by a tax-exempt organization, or for another qualifying purpose. Accepting these certificates correctly protects you from liability. Accepting them carelessly leaves you on the hook if the exemption turns out to be invalid.
A properly completed certificate generally requires the buyer’s name, address, type of business, reason for the exemption, and a tax identification number. If the buyer isn’t registered in the state where the sale occurs, a federal employer identification number or a registration number from another state may substitute. Collect the certificate at or before the time of sale. Most states allow a grace period, commonly 90 days, to obtain one after the transaction, and certificates must be kept on file for at least four years in most jurisdictions.
For sellers buying inventory from suppliers, the Multistate Tax Commission publishes a Uniform Sales and Use Tax Exemption/Resale Certificate that many states accept.4Multistate Tax Commission. Uniform Sales and Use Tax Exemption/Resale Certificate – Multijurisdiction The form lets you claim a resale exemption across multiple states with a single document. A blanket version can cover ongoing purchases from the same supplier, though some states require renewal every three to four years. Not every state accepts the multijurisdiction form, and a few limit it strictly to resale rather than broader exemptions, so check acceptance before relying on it.
One trap worth remembering: even exempt sales may count toward your nexus threshold, depending on how the state defines it. Selling $120,000 worth of exempt groceries into a gross-sales state still creates nexus there, even though no tax is due on those particular transactions.
If You’re Selling Into the U.S. From Abroad
Economic nexus laws do not distinguish between domestic and foreign sellers. A company based in Germany or Japan that exceeds $100,000 in sales delivered to customers in a U.S. state has the same registration and collection obligations as a seller in Ohio. The tax attaches to where the goods are delivered, not where the seller is incorporated.
The practical barriers are higher for international sellers. Registering for a seller’s permit typically requires a Federal Employer Identification Number, which a non-U.S. business may not have. Obtaining an FEIN from the IRS is possible for foreign entities, but the process takes longer than domestic applications, and state practices on alternative identification are inconsistent. International sellers who work through U.S.-based marketplace platforms avoid much of this complexity because the marketplace facilitator handles collection. The compliance challenge hits hardest when a foreign seller also runs a direct-to-consumer website shipping into the U.S.
Sellers of any origin who discover they should have been collecting tax but weren’t can explore voluntary disclosure agreements, which many states offer. These programs typically limit the lookback period and waive or reduce penalties in exchange for coming forward and registering proactively. A seller who self-reports before being contacted by auditors gets significantly better treatment than one who gets caught.
Managing Twenty States at Once
The operational challenge is not any single state’s rules. Each state is manageable on its own. The difficulty is running 20 or 30 of them simultaneously, each with different thresholds, measurement bases, filing frequencies, due dates, and product taxability rules. A product that is taxable in one state may be exempt in another. A return due on the 20th in one state may be due on the last day of the month in another.
Automated sales tax software handles much of this by integrating with e-commerce platforms to calculate the correct rate at checkout, track cumulative sales against each state’s threshold, and generate returns. For most multi-state sellers these tools are the only realistic way to stay current without hiring dedicated tax staff. Most platforms flag when a seller approaches 80% or 90% of a state’s nexus threshold, giving lead time to register before the obligation kicks in.
The records to maintain include transaction-level detail for every sale (date, amount, destination, tax collected, and the platform or channel used), copies of all exemption and resale certificates received, filed returns with confirmation numbers, and any correspondence from state tax agencies. Detailed records are your primary defense in an audit, and they become far harder to reconstruct after the fact than to keep as you go.