Being based outside the US does not automatically remove US sales tax obligations. That’s the part that catches most foreign sellers off guard, particularly because sales tax is a state and local issue, not something the IRS administers. Federal income tax and state sales tax are entirely separate systems, with separate registration processes, separate rules, and separate authorities enforcing them.
The concept that actually determines whether you owe sales tax in a given state is nexus, a sufficient connection to that state created either through physical presence or through the volume of sales you make into it. Amazon marketplace sales, direct Shopify sales, and SaaS or digital product sales can all produce different compliance outcomes even for the exact same underlying business, which is why this guide is built as a reference and decision framework rather than a single flat answer.
Nexus is the legal connection between a business and a state that’s sufficient to require that business to register, collect, and remit sales tax there. There are two primary paths to nexus, and they work independently of each other.
Traditional physical-presence nexus can be triggered by inventory stored in a state, employees or contractors working there, an office or warehouse, an agent or representative conducting business on your behalf, or other physical business activity within the state’s borders.
Following the 2018 US Supreme Court decision in South Dakota v. Wayfair, states gained the authority to require out-of-state sellers to collect tax based purely on sales volume into the state, without any physical presence at all. Every state that adopted the economic nexus wrote its own specific rules following that decision, which is why individual state law, not a single national standard, controls the actual threshold and requirements in each case.
A foreign seller can trigger economic nexus in a state without ever setting foot there, without any US employees, and without any US warehouse, purely by selling enough into that state’s market.
State | Threshold | Measurement Period | Transaction Count? | Marketplace Sales |
|---|---|---|---|---|
California | $500,000 | Current or prior calendar year | No | Generally included |
Texas | $500,000 | Rolling 12 months | No | Generally included |
New York | $500,000 | Preceding 4 sales tax quarters | Yes — 100 txns (both required) | Generally included |
Florida | $100,000 | Prior calendar year | No | Generally excluded |
Washington | $100,000 | Current or prior calendar year | No | Generally included |
Tennessee | $100,000 | Current or prior calendar year | No | Generally included |
Notice New York’s dual test: it requires both the dollar threshold and the transaction count to be met, unlike most of the other states shown, which use a dollar threshold alone. Whether marketplace sales count toward your own threshold also varies by state, which is exactly the kind of detail that changes the analysis entirely. Full remote-seller guidance by state is available through Streamlined Sales Tax, a useful comparison resource, though individual state law is always the controlling authority, not the Streamlined Sales Tax summary itself.
Economic nexus gets most of the attention because it’s the newer concept, but physical nexus is often the one foreign sellers overlook entirely, precisely because they assume nexus only comes from a dollar threshold.
Physical connections that can matter include US inventory, fulfillment center storage, third-party logistics arrangements, US-based employees, contractors, or representatives, and warehouses of any kind. Amazon FBA is the clearest example: inventory stored in a state through Amazon’s fulfillment network may create physical-presence considerations in that state independent of whether you’ve crossed any economic nexus dollar threshold there at all.
This does not mean Amazon FBA automatically creates a nexus in every single state where Amazon happens to store your inventory. It means physical presence is a separate analysis from economic nexus, and FBA sellers specifically need to know which states their inventory actually sits in, since that list can shift as Amazon redistributes stock across its fulfillment network without much visibility to the seller.
Most states have enacted marketplace facilitator laws that require Amazon, as the facilitator, to collect and remit sales tax on marketplace transactions on the seller’s behalf. California’s Marketplace Facilitator Act is a representative example: since October 2019, Amazon has generally been responsible for collecting and remitting tax on California deliveries facilitated through its marketplace, shifting that specific burden away from the individual seller for those transactions.
Marketplace collection does not automatically eliminate every seller’s state compliance obligation. Even in states like California where marketplace sales are generally excluded from what CDTFA considers your own taxable activity, registration requirements can still apply if you have physical presence in the state independent of the marketplace, such as inventory stored there through FBA. “Amazon handles it” is frequently true for the collection step specifically, and frequently incomplete as a full compliance answer.
Shopify is commerce infrastructure, a platform for running your own store, not a marketplace facilitator in the way Amazon or Etsy generally are. That distinction changes who’s responsible for collection.
Treating Amazon and Shopify as equivalent is one of the most common mistakes in this area. They solve different parts of the sales tax problem: Amazon’s marketplace facilitator status shifts collection for marketplace transactions; Shopify generally does not carry that same legal role for your direct store sales.
Software and digital product taxation varies more by state than almost any other product category. Some states tax SaaS as a service, some tax it as tangible personal property by statutory definition, some exempt it entirely, and some draw distinctions between downloadable software, cloud-based access, and subscription models that don’t map cleanly onto each other.
Foreign software companies selling into the US need product-by-product, state-by-state classification review. A product that’s exempt in one state can be fully taxable in another, and the underlying delivery method, downloaded versus streamed versus accessed via browser, can itself change the classification within a single state’s rules.
Confirm which state’s threshold or physical presence trigger has actually been met.
Physical presence, economic threshold, or both, since this affects the analysis and the effective date.
Taxability is a separate question from nexus itself, particularly relevant for SaaS and digital products.
States generally specify when the obligation to register begins once a threshold is crossed, and this date varies by state.
Complete registration with the appropriate state tax authority.
Set up tax collection accurately for that state’s specific rate structure, including any local add-ons.
On whatever filing frequency and schedule that state requires.
Documentation sufficient to support every filed return.
Nexus isn’t a one-time determination; it needs to be re-checked as sales activity and inventory locations change.
Nexus, registration, collection, filing, and remittance are related but distinct steps, and a business can have obligations at multiple stages simultaneously, not just “turned on” as a single toggle in an ecommerce platform.
Flipping on a tax-collection setting inside Shopify or another platform is not the same as being properly registered, and it’s not the same as having a compliant filing process behind it. Each step needs to actually happen, in the right order.
Once a foreign seller reaches nexus in multiple states, compliance complexity compounds fast: different dollar and transaction thresholds, different taxability rules for the same product, different filing frequencies, different registration processes, different marketplace treatment, different exemption certificate rules, and different local tax layers stacked on top of state rates.
☐ Review total sales by state against current thresholds, monthly or quarterly
☐ Confirm inventory locations haven’t shifted (particularly relevant for FBA sellers)
☐ Reconcile marketplace-collected tax against your own records
☐ Confirm filing deadlines for every state where you’re registered
☐ Review any state notices received since the last check
☐ Reassess product taxability if you’ve launched anything new
☐ Gross sales by state
☐ Taxable sales by state
☐ Exempt sales
☐ Marketplace sales
☐ Direct sales
☐ Refunds
☐ Customer location data
☐ Inventory locations
☐ Fulfillment locations
☐ Marketplace facilitator tax reports
☐ Filed sales tax returns
☐ Registration certificates
☐ Tax collected
☐ Tax remitted
Keeping this organized is fundamentally a bookkeeping problem before it’s a tax filing problem. Sales tax compliance is only as reliable as the underlying sales data it’s built on.
Do you sell to US customers?
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Where are your customers located?
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Do you have physical presence or inventory in any state?
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Do your sales exceed a state’s economic nexus threshold?
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Are the products or services taxable in that state?
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Are the sales made through a marketplace facilitator?
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Does the marketplace collect the tax on those sales?
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Do you still have registration or filing obligations?
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Register / Collect / File / Monitor
The selected-states table earlier in this article covers six commonly relevant states. The full US Sales Tax Threshold Reference Table extends that same format further, helping you quickly identify which additional states are worth investigating based on where your sales are concentrated.
NexusWorks can help foreign-owned businesses review US sales activity, state-by-state exposure, marketplace versus direct sales, physical presence, economic nexus, registration requirements, and ongoing filing obligations, through US tax compliance services. Coordinating this with your existing ecommerce financial systems and broader tax filing and compliance work keeps everything reviewed together rather than piecemeal.
This is a nexus review and compliance support, not a guarantee of penalty elimination, guaranteed compliance, or a specific outcome from any state tax authority.
Being based outside the United States does not automatically remove US state sales-tax obligations. Foreign sellers need to evaluate physical presence, economic nexus, product taxability, marketplace facilitator rules, registration requirements, and ongoing filing obligations state by state, not as a single blanket answer.
Amazon, Shopify, and SaaS sales can each create different exposure even within the same business, which is why this is a per-state, per-channel analysis rather than a one-time check. Get a Nexus Evaluation to work through where your actual exposure sits.
It can, depending on whether the company has physical presence or economic nexus in a specific state. Foreign incorporation alone does not remove state sales tax obligations.
The legal connection between a business and a state sufficient to require registration, collection, and remittance of that state's sales tax, established through physical presence, economic activity, or both.
Generally, yes, for marketplace-facilitated transactions in states with marketplace facilitator laws. This does not automatically cover direct sales outside the marketplace or resolve every registration question tied to inventory location.
Shopify provides tools to calculate and apply tax once configured, but as commerce infrastructure rather than a marketplace facilitator, the seller generally remains responsible for determining nexus and configuring collection correctly.
Storing inventory in a state through FBA can create physical-presence nexus considerations in that state, independent of any economic nexus threshold. It does not automatically create nexus in every state Amazon might use.
A state's authority to require tax collection based on sales volume into that state, without any physical presence, following the 2018 South Dakota v. Wayfair decision. Each state set its own specific threshold and rules.
It depends entirely on the state. Some states tax SaaS, some exempt it, and classification can vary based on delivery method. There is no single national answer.
Generally once nexus, physical or economic, has been established in a specific state, with the effective registration date determined by that state's own rules.
No. An EIN is a federal tax identification number and has no bearing on state sales tax nexus, which is determined by physical presence or economic activity in a given state.
It varies by state. Some states include marketplace-facilitated sales when calculating whether you've crossed the threshold; others exclude them. This is exactly the kind of detail that needs state-specific confirmation.
