You can owe US sales tax in a state where you’ve never set foot, with no office, no staff, and no warehouse there. That surprises a lot of foreign founders, because sales tax isn’t federal. Each state runs its own, and a rule called nexus decides when you have to start collecting it. Cross a state’s threshold and you’re on the hook, wherever you happen to live.
This is the tax most cross-border founders miss, partly because it’s easy to assume “no US presence” means “no US tax.” Here’s how it actually works.
Sales tax is a state game, not a federal one
The US has no national sales tax and no VAT. Instead, most states (and many cities and counties within them) levy their own sales tax, each with its own rate, rules, and list of what’s taxable. That’s why a SaaS subscription might be taxable in one state and not in another, and why “the US sales tax rate” isn’t a real number.
For you that means there isn’t one filing. There’s a potential obligation in each state where you do enough business, and each one is judged on its own terms.
What nexus means, and the Wayfair shift
Nexus is just the legal connection that lets a state make you collect its tax. There are two flavors.
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Physical nexus
The old-school kind. You have something tangible in the state: inventory in a warehouse, an office, employees, or a contractor. For founders using US fulfillment, stored inventory is the common trap — your stock sitting in a state’s warehouse can create nexus there.
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Economic nexus
The newer kind, and the one that catches remote sellers. After the 2018 Supreme Court case South Dakota v. Wayfair, states can require sales tax collection based purely on your sales volume into the state, with no physical presence at all. Sell enough into a state and you have nexus.
Wayfair is the reason a founder in Lahore or London can owe sales tax in Texas. Before 2018, you generally needed something physical in a state. After it, the numbers alone can be enough.
The thresholds vary by state
Economic nexus kicks in once you pass a state’s threshold, and the thresholds differ. A widely copied benchmark is around $100,000 in sales or 200 separate transactions into the state in a year, which several states adopted after Wayfair. But it’s not universal.
Some states use a higher sales figure, like $500,000. Some dropped the 200-transaction count entirely and look only at revenue. Some measure the current year, others the previous one. So treat $100,000 / 200 transactions as a rough mental model, not a rule that applies everywhere.
There is no national sales-tax threshold. Each state sets its own dollar amount and transaction count, and several have changed theirs since 2018. Where you owe depends on where your customers are and how much you sell into each state.
The practical method is to track your sales by state. As revenue into a given state climbs toward its threshold, that’s your signal to register for a sales tax permit there, start collecting, and file returns on the state’s schedule.
Marketplaces often collect it for you
Here’s the relief. If you sell through a large platform, you’re frequently off the hook for the collection itself. Most states passed marketplace facilitator laws that push the duty onto the platform.
| Marketplace sales | Your own website | |
|---|---|---|
| Who collects the tax | The platform | You |
| Covered by facilitator laws | ||
| Counts toward your nexus tracking | ||
| You may still need to register |
Sell on Amazon or Etsy and the platform usually calculates, collects, and remits the sales tax for the buyer. Sell the same product through your own Shopify or WooCommerce store and that duty is yours. Many founders run both channels, which is where it gets fiddly: the marketplace handles its slice, and you handle the direct slice. Note that marketplace sales can still count toward whether you’ve crossed a threshold, so they’re not invisible even when the platform collects.
Sales tax is not income tax
These two get blurred constantly, so keep them in separate boxes.
Income tax is charged on profit. For a foreign-owned single-member LLC, that’s mostly a federal question tied to whether your income is effectively connected to a US trade or business, and it travels alongside forms like Form 5472. We cover that in US LLC taxes for non-residents.
Sales tax is charged on specific sales, collected from your customer at checkout, and paid over to a state. You’re a collection agent for the state, not the one ultimately paying. You can easily owe sales tax in a state while owing no US income tax at all, and the reverse happens too. Different tax, different trigger, different government.
What to do about it
Start by knowing where your customers are and roughly how much you sell into each state. That single habit tells you when a threshold is coming. From there it’s register, collect, file, and repeat on each state’s calendar.
It’s genuinely annoying to do by hand across dozens of states with different rates and due dates. That’s the part we take off your plate: figuring out where you actually have nexus, registering where you must, and keeping the filings on schedule so a quiet obligation in some state doesn’t turn into a penalty later.
Not sure where you owe sales tax?
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