When do you have to collect sales tax in other states?

Nexus is the connection that gives a state authority to require you to collect and remit its sales tax. Historically it required physical presence: an office, employees, inventory, or property in the state. The Supreme Court's 2018 decision in South Dakota v. Wayfair overturned that requirement and permitted states to impose collection obligations based on economic activity alone. Nearly every state with a sales tax now has an economic nexus rule, commonly triggered at around 100,000 dollars of sales into the state or a specified transaction count, though both the thresholds and whether transaction counts apply vary considerably.

The practical consequences fall hardest on small online sellers, who can acquire obligations in dozens of states without ever leaving home. Inventory stored in a third-party fulfillment warehouse can create physical nexus in that state independently of sales volume, which catches sellers using distributed fulfillment networks by surprise. Marketplace facilitator laws shift the collection duty to the platform for sales made through large marketplaces, which removes much of the burden for sellers who operate exclusively that way but not for those with their own storefront as well.

What to do about it. Track sales by state against each state's threshold rather than assuming, register where you cross, and file returns on the schedule assigned, which continues even in periods with no sales. Sales tax automation services integrate with common commerce platforms and handle rate calculation and filing at modest cost, and for any seller approaching multi-state scale that is cheaper than the alternative. Two cautions: sales tax collected is not revenue, it is money held in trust for the state, and misusing it carries personal liability for owners in many states even where an entity exists. And rules change frequently enough that verifying current thresholds before relying on any published figure is warranted.