Until recently, eCommerce sellers located in other countries didn’t have to worry about registering, collecting, reporting, and remitting sales taxes to U.S. states. However, the rules have changed.
In June 2018, the U.S. Supreme Court made a landmark ruling that any online seller with “economic nexus” in a state is required to follow that state’s sales tax laws.
Each state has its own set of definitions as to what constitutes economic nexus, so dealing with the paperwork can get complicated. Here are some of the most common qualifications.
Specific Number of Transactions or Dollar Amount
Most states require sales tax processing from any seller who exceeds a specified amount in annual sales or number of transactions with customers in the state.
In Florida, for example, the minimums are 200 separate retail transactions or $100,000 of retail sales of personal property or taxable services that are delivered within the state.
Any Physical Presence, Including Amazon FBA Warehouses
Even if your main office is located outside the U.S., you may have a branch office, employee, sales rep, or warehouse in one or more U.S. states. That’s enough to establish tax nexus in the state(s).
In the case of states where Amazon FBA handles tax collection — such as Washington and Pennsylvania — you may still be required to file the sales tax returns.
Non-U.S. Citizen Living in the U.S.
The legal residence status of the business owner has nothing to do with the company’s state tax nexus. No matter what your nationality, if you are running your business from (or storing inventory in) a U.S. state, you must comply with the state’s tax regulations.