If you sell into a state where you have no office, warehouse, or staff, you generally owe remote seller sales tax in that state once your sales there cross its economic nexus threshold — most commonly $100,000 in gross sales in a calendar year. At that point you have to register for a sales tax permit, charge the right rate on taxable sales, file returns on the schedule the state assigns you, and keep the records to prove it. Thresholds, what counts toward them, and the measurement window vary by state, and physical connections you may not have thought about (a remote employee, inventory in a fulfillment center) can create the same obligation at much lower dollar amounts.
How Economic Nexus Works
Every state that has a sales tax now uses economic nexus rules, a framework that took hold after the Supreme Court’s 2018 decision in South Dakota v. Wayfair, Inc. (585 U.S. 162).1Supreme Court of the United States. South Dakota v. Wayfair, Inc. Before that, only businesses with a physical footprint in a state owed its sales tax. Now, activity alone can trigger the duty to collect.
The most common threshold is $100,000 in gross sales or 200 separate transactions into the state within a calendar year, patterned on the South Dakota law the Court upheld. The transaction count is fading. South Dakota itself, California, Colorado, Iowa, and others have dropped the 200-transaction test and now look only at dollar volume. Illinois removed its transaction threshold effective January 1, 2026, and Utah did the same in mid-2025. A few states set the dollar threshold higher, at $250,000 or $500,000.
Which Sales Count
States split on how they measure the dollar figure. Under a “gross sales” standard, everything shipped into the state counts, including wholesale orders, resale transactions, and sales of exempt products. Under a “retail sales” standard, sales made with a valid resale certificate come out of the count, though other exempt sales (groceries in states that exempt them, for example) still count.2Streamlined Sales Tax Governing Board. Remote Seller Thresholds Terms If a big share of your volume into a state is wholesale, that difference can be the difference between having nexus and not.
The Time Window
Some states look at the current or prior calendar year. Others use a rolling twelve-month period, which means you can cross the line mid-year and owe registration right away rather than at year-end. Once you’re over, most states expect you to register within 30 to 60 days.
Physical Nexus Can Catch You Below the Threshold
Economic activity is not the only trigger. Two physical connections routinely create registration obligations for remote sellers who assume they’re well under the threshold.
A Remote Employee in Another State
One employee working from home in a state can establish physical nexus for your business there, regardless of your sales volume into that state. Many states define “doing business” broadly enough that a single person on payroll creates a sales tax obligation, an income tax obligation, or both. This catches businesses that hired remote workers without mapping the tax consequences of each worker’s location.
Inventory in a Fulfillment Center
Storing inventory in a third-party warehouse, including a marketplace-operated fulfillment center, creates physical nexus in a majority of states. More than 20 states take the position that your inventory sitting in a warehouse within their borders creates a sales tax obligation, even when a third party controls the facility and you’ve never been there. About eight states have said inventory controlled entirely by a third party does not create nexus. Many states have issued no guidance at all. If you use a fulfillment network that spreads inventory across the country, you may have physical nexus in states where your direct sales are nowhere near the economic threshold.
When a Marketplace Collects Tax for You
If your sales go through Amazon, Etsy, eBay, Walmart Marketplace, or a similar platform, the platform is probably collecting and remitting sales tax on those sales. All 45 states with a sales tax, plus Washington, D.C., have marketplace facilitator laws that put the collection duty on qualifying platforms.3Streamlined Sales Tax Governing Board. Marketplace Facilitator
That doesn’t always end your obligation. Some states still require the underlying seller to register and file returns even when the facilitator collected everything. Others require registration only if you also make direct sales into the state outside the marketplace. The Streamlined Sales Tax Governing Board maintains state-by-state guidance on what marketplace sellers still owe.3Streamlined Sales Tax Governing Board. Marketplace Facilitator If every sale you make runs through a single marketplace and you never sell direct, your compliance load drops sharply. Confirming that state by state is still on you.
States With No Sales Tax
Five states have no general statewide sales tax: Alaska, Delaware, Montana, New Hampshire, and Oregon. There’s no state-level remote seller registration in any of them. Alaska is a partial exception: it has no state sales tax, but some Alaska localities impose their own and have begun enforcing economic nexus against remote sellers through a centralized collection system.
Registering for a Sales Tax Permit
Once you’ve established nexus, you need a permit before you can legally collect tax. The process is straightforward, but you’ll want your records ready before you start.
What Every State Application Asks For
You’ll need your Federal Employer Identification Number,4Internal Revenue Service. Employer Identification Number the legal name of your business entity as registered in your state of formation, your primary business address, and the names and Social Security numbers of owners, officers, or partners. Most applications ask you to pick a NAICS code and estimate your sales volume, which the state uses to set your filing frequency.
One field trips people up: the exact date you first crossed the nexus threshold in that state. Getting this wrong either puts you in the position of collecting tax before you’re authorized, or leaves a gap where you should have been collecting and weren’t.
Registering in Multiple States at Once
If you need permits in several states, the Streamlined Sales Tax Registration System (SSTRS) lets you file a single free application covering all participating states.5Streamlined Sales Tax Governing Board. Sales Tax Registration SSTRS More than 20 states are full members. You complete one form, pick the states you need, and the system routes your information to each state.6Streamlined Sales Tax Governing Board. Seller’s Guide to the Streamlined Sales Tax Registration System For non-member states, you register through each state’s department of revenue site directly.
Timing and Fees
Most states process applications within a few business days, and many issue permits almost immediately through automated systems. States with manual review can take up to two weeks in busy periods. You’ll receive a sales tax permit or certificate of authority, usually by email, along with a state-issued tax ID that’s separate from your EIN. Save the confirmation or application ID. Registration is free in most states; a few charge a small fee or require a modest refundable security deposit.
Collecting and Filing Correctly
With an active permit, you have to charge the right rate on every taxable sale into that state and hold that money until you remit on your assigned schedule.
Which Rate You Charge
Most states use destination-based sourcing: the rate is set by where the buyer receives the product, not where you ship from. About a dozen states use origin-based sourcing, tied to the seller’s location. Destination-based sourcing is the harder model for remote sellers because a single state can contain thousands of local rates. Tax automation software exists for this problem, and it’s usually worth the cost once your volume in destination-based states is meaningful.
Filing Frequency and Zero Returns
States assign you a filing schedule based on your volume: monthly for larger sellers, quarterly or annually for smaller ones. In any period where you made no sales into the state, most states still require a “zero return.” Skipping a zero return can produce late-filing penalties just like skipping a return with tax due.
Record-Keeping
Keep sales records, tax collected, and exemption certificates for at least three to seven years. The IRS baseline for records supporting income items is three years, extending to six or seven in certain circumstances,7Internal Revenue Service. How Long Should I Keep Records and state sales tax audit windows often overlap. Matching the longer end of the range is safer. A permit doesn’t lapse on its own; your filing obligations run until you formally close the account.
Handling Exemption Certificates
Not every sale is taxable. When a buyer gives you a valid exemption certificate — for resale, for a nonprofit or government buyer, for certain agricultural uses — you don’t collect tax on that transaction, but you have to keep the certificate on file and confirm the exemption makes sense for what you’re selling.
The Multistate Tax Commission publishes a Uniform Sales and Use Tax Certificate accepted in many states. Reasonable care means the product being sold should be the type the buyer normally resells or incorporates into what they manufacture.8Multistate Tax Commission. FAQ – Uniform Sales and Use Tax Certificate Multijurisdictional Accepting a certificate without that check can leave you owing the tax yourself if the exemption turns out to be invalid. In most Streamlined member states, you don’t have to verify the buyer’s registration number. Georgia is an exception and requires seller verification.9Streamlined Sales Tax Governing Board. Exemption Certificates Many states accept blanket certificates covering an ongoing buyer-seller relationship rather than requiring a new one for each order.
If You’re Already Behind: Voluntary Disclosure
If you’ve been over the nexus threshold in a state for a while and never registered, applying for a permit as if you’re a new arrival is the wrong move. That can trigger back-tax assessments for the whole period you should have been collecting. A voluntary disclosure agreement (VDA) is usually better.
The Multistate Tax Commission runs a national program that lets sellers negotiate VDAs through a single point of contact covering multiple states. You come forward, file returns for a limited lookback period (typically three to four years, though it varies), pay the tax owed during that window, and the state waives penalties.10Multistate Tax Commission. Multistate Voluntary Disclosure Program The eligibility catch: the state can’t already have contacted you about the tax. Once you’ve received an inquiry or notice, voluntary disclosure is generally off the table for that tax type.
Many states also run their own VDA programs with their own terms. The MTC program has a $500 minimum tax liability per state. Below that, registering and filing directly is the more practical route.
Personal Liability If You Get It Wrong
Sales tax you collect from customers isn’t your money. States treat it as trust fund money you hold on behalf of the government. When a business fails to remit it, or fails to collect it in the first place, states don’t stop at the business entity. They pursue the individuals who had authority to make compliance happen.
Depending on the state, that can reach owners, corporate officers, directors, managers, and anyone with check-signing authority or control over which bills get paid. Some states require “willful” failure — you knew the tax was owed and chose not to pay. Others use a reasonable-care standard that reaches anyone who should have known. Title alone doesn’t decide it; tax authorities look at who actually controlled the money and the compliance process.
This liability can follow you personally even if the business goes bankrupt. In most states, trust fund tax debts survive personal bankruptcy. The exposure is the full tax owed, plus interest, plus in some states a penalty multiplier on top. For a seller with nexus in dozens of states and years of noncompliance, the personal numbers can be very large.
When Your Sales Drop Below the Threshold Later
Crossing a nexus threshold isn’t easily reversed. If your sales into a state fall below the threshold, the obligation doesn’t automatically go away. Most states require you to keep collecting and filing through the rest of the current measurement period, and in some cases through the following year as well. This “trailing nexus” typically keeps your registration active for at least one full year after your last threshold-crossing period.
Once the trailing period ends and your sales have stayed below the line, you can close the account. File all outstanding returns through the closure date. Simply stopping filings without formally closing can lead to estimated assessments and late-filing penalties, because the state has no way of knowing your sales dropped unless you tell them.