Since the Supreme Court's Wayfair decision, physical presence stopped being the test: sell enough into a state and you owe its sales tax — from anywhere in the world. Most e-commerce sellers discover this years late, with penalties compounding. Here's the map.
Economic nexus in one paragraph
Each state sets thresholds — commonly $100,000 in sales or 200 transactions per year into that state (some, like California and Texas, use $500,000). Cross a threshold and you must register, collect and remit that state's sales tax. Around 46 jurisdictions have such rules, each with quirks in what counts and when the clock starts.
The marketplace facilitator relief — and its limits
Good news: for sales on Amazon, Walmart, Etsy or TikTok Shop, marketplace facilitator laws make the marketplace collect and remit for you in nearly every state. The catch: your Shopify/DTC sales are yours to handle — and in many states, marketplace sales still count toward your threshold even though the marketplace remits the tax. A seller doing $80k DTC + $150k on Amazon into one state may have nexus for those DTC sales.
A practical compliance routine
- Run a nexus study yearly (quarterly once you're growing): sales by state from your channel reports against each state's thresholds.
- Register before collecting — collecting without registration is its own violation.
- Automate the returns: tools like TaxJar or Avalara file state returns from your channel data; typical cost is far below the penalty risk.
- Book collected tax as a liability, never income — the most common bookkeeping error we find in cleanups.