A sales tax number is a state-issued identification code that authorizes your business to collect sales tax from customers on that state’s behalf and remit it to the state. You need one in every state where your business has established a tax connection, either through a physical presence or by crossing a sales threshold (most commonly $100,000 in sales into that state). The number is purely a state credential and is separate from the federal Employer Identification Number the IRS issues.
What the Number Actually Is
Different states use different labels for the same thing. You’ll see it called a seller’s permit, a sales tax license, a sales tax certificate, a resale number, or a state tax ID. All of them describe the same authorization: the state has registered your business, assigned you an account number, and expects you to start charging customers the appropriate sales tax and sending it in on a schedule.
Once the state issues the number, you’re acting as its collection agent. The sales tax you charge is not your revenue. States treat it as trust-fund money, and that distinction matters a great deal when things go wrong. It also matters when things go right: the number doubles as your credential for buying inventory tax-free from suppliers, which is covered further down.
When You Have to Register
Registration is triggered by “nexus,” the legal connection between your business and a state that creates a tax obligation. Nexus comes in two flavors.
Physical Presence
Physical nexus exists when your business has a tangible footprint in a state: an office, a warehouse, a retail location, an employee working from home in that state, or inventory stored in a third-party fulfillment center. Any of these creates a registration obligation regardless of how much you sell there. Even one remote employee in a state you’ve never otherwise touched can put you on the hook.
Economic Nexus
Economic nexus applies when you cross a sales threshold in a state without having any physical footprint there. The Supreme Court authorized this approach in 2018 in South Dakota v. Wayfair, ruling that states could require remote sellers to collect sales tax based on the volume of their in-state sales alone.1Supreme Court of the United States. South Dakota v. Wayfair Inc., 585 U.S. (2018) Nearly every state with a sales tax has adopted an economic nexus standard since.2Congressional Research Service. State Sales Tax Nexus After South Dakota v. Wayfair
The most common threshold is $100,000 in gross sales into a state. Some states pair that with a 200-transaction alternative, so crossing either measure triggers the requirement. The trend is away from the transaction test, and as of 2026, roughly 18 jurisdictions still include a transaction-count threshold. If you move a high volume of low-dollar items, check each state’s specific rule, because a transaction-count trigger can hit long before your revenue would.
Once you cross either threshold, you’re required to register before making additional taxable sales in that state. Waiting for the state to notice is not a workable plan.
States Without a Sales Tax
Five states have no statewide sales tax: Alaska, Delaware, Montana, New Hampshire, and Oregon. You don’t need a sales tax number in those states for general retail. Alaska is a partial exception: while there’s no state-level tax, some Alaska municipalities impose their own local sales taxes, and businesses operating in those localities may need to register at the local level.
If You Only Sell Through a Marketplace
If your sales run entirely through a platform like Amazon, Etsy, or Walmart Marketplace, the platform is likely collecting and remitting sales tax for you. Nearly every state with a sales tax has passed marketplace facilitator laws requiring the platform itself to handle collection on facilitated sales once it meets the state’s nexus thresholds.3Streamlined Sales Tax. Marketplace Facilitator
That doesn’t clear you entirely. You’re still responsible for tax on any sales you make outside the platform, whether through your own website, at a trade show, or from a physical location. Some states also require marketplace sellers to register and file returns reporting in-state sales even when the marketplace did the collecting. Check the requirements in each state where you have meaningful sales, whether or not a platform is handling collection.
How to Apply
You register through the state’s department of revenue, tax commission, or equivalent agency. Most states run an online registration portal, and the application moves quickly if you have your documents ready.
- Your federal EIN. Sole proprietors without an EIN may be able to use a Social Security Number instead.
- Business details: legal name, trade name if different, physical and mailing addresses, and entity type (LLC, corporation, sole proprietorship, and so on).
- Owner information: names and Social Security Numbers for all owners, partners, or corporate officers.
- Your projected annual taxable sales in the state, which the agency uses to assign your filing frequency.
- The date you began or plan to begin making taxable sales in the state.
Online applications are often approved within one to two business days. Paper applications can take four to six weeks. You aren’t supposed to collect sales tax until the state has actually issued your number, so plan around the processing time if you’re launching on a deadline.
Fees and Deposits
Most states charge nothing for a basic permit. Where fees exist, they typically run $10 to $50, though at least one state charges up to $100. A handful of states also require a refundable security deposit or surety bond, especially for new businesses or remote sellers with no filing history. Those deposits range from $50 to several thousand dollars depending on the state and your estimated tax liability, and they’re usually refunded once you build a reliable filing track record.
Registering in Multiple States
If you sell into many states, the Streamlined Sales Tax Registration System lets you register in multiple participating states through a single application. Twenty-three states are full members of the Streamlined Sales and Use Tax Agreement.4Streamlined Sales Tax. State Detail You pick the member states you need, manage your information from one account, and cancel registrations individually if things change.5Streamlined Sales Tax. Registration FAQ
Remote sellers meeting economic nexus thresholds can also use a Certified Service Provider through the program. A CSP handles tax calculation, return preparation, and filing at no cost to the seller in states where the seller qualifies, because the states compensate the provider directly.6Streamlined Sales Tax. FAQs – About Certified Service Providers For a business suddenly facing obligations in a dozen states, that free service can outweigh any registration fee.
After You’re Registered
You’re now responsible for charging the correct combined rate on every taxable sale. That combined rate includes the state tax plus any applicable county, city, or district taxes, and it can shift by address within a single state. Getting the rate wrong is one of the most common audit triggers, so use tax calculation software or verified rate tables rather than estimating.
The state assigns your filing frequency based on your projected sales volume. High-volume sellers usually file monthly, mid-range sellers quarterly, and low-volume sellers annually. You must file a return every period even if you made zero taxable sales. A zero-dollar return is still a required return, and skipping it triggers the same penalties as missing any other deadline.
Between filings, keep collected sales tax separate from your operating funds. Commingling it with general revenue is risky in practice and legally problematic, because when the return is due you need to hand over every dollar you collected. The state considers that money already its own.
Records
Keep sales records, exemption certificates, and filed returns for at least four years, ideally longer. Most states can audit going back three or four years, and some extend to five. Exemption certificates deserve indefinite retention: if you can’t produce a valid certificate during an audit, the state can assess tax on those transactions as if no exemption existed.
Buying Inventory Tax-Free
Your sales tax number has a second use. When you buy goods to resell, you give the supplier a resale certificate that includes your number, and the supplier ships to you without charging sales tax. The reasoning is that tax will be collected once, from the end customer, when you eventually sell the item.
This only covers items you actually intend to resell. Using a resale certificate to buy office furniture, supplies for internal use, or anything your business will consume rather than resell is tax fraud. States audit resale certificate use, and abusing the exemption exposes you to back taxes, penalties, and interest on every improper purchase.
When a customer presents a resale certificate to you, verify it. Many states offer online lookup tools to confirm a buyer’s permit is active. Accepting an invalid certificate doesn’t shield you. If the certificate turns out to be fraudulent or expired, you may owe the uncollected tax yourself.
Penalties for Ignoring the Rules
The consequences of skipping registration or holding onto collected tax range from expensive to career-altering. States impose both penalties and interest on late or unfiled returns. A common structure is 5% of the unpaid tax per month the return is late, capped at 25%, with interest accruing separately on top. Where the state finds fraud, the penalty rates climb well beyond that.
The harder risk is the trust-fund nature of the money. Because sales tax belongs to the state from the moment you collect it, failing to remit is treated differently from ordinary business debt. Most states can pierce the corporate veil and hold individual officers, owners, or managers personally liable for unremitted sales tax. That personal liability survives bankruptcy, so you can’t discharge it the way you might discharge other business debts. This is where owners often get blindsided: they assumed the LLC or corporation shielded them, and for collected-but-unremitted sales tax, it doesn’t.
If You’re Already Behind
If you realize you should have been collecting sales tax in a state and weren’t, a voluntary disclosure agreement is usually the best route. Under a VDA, you approach the state before it approaches you. In exchange, the state typically waives penalties and limits the lookback period to three or four years of back taxes plus interest rather than the full period of noncompliance.7Multistate Tax Commission. Lookback Periods for States Participating in National Nexus Program
Timing is the catch. You generally cannot enter a VDA once the state has already contacted you about an audit or identified you as noncompliant. The window closes as soon as the state starts looking. Addressing the gap proactively through a VDA is almost always cheaper than waiting to be found.