Sales Tax Economic Nexus: A State-by-State Tracking Checklist

Economic nexus is based on your sales volume into a state over a defined period, commonly the current or prior calendar year, regardless of whether you have any physical footprint there. Most states set that threshold at one hundred thousand dollars in sales, and some historically paired it with a count of two hundred separate transactions before several states dropped the transaction-count prong in later years, leaving just the dollar figure. A handful of states have no statewide sales tax, so nexus is largely moot there (though local jurisdictions, such as those in Alaska, can still tax remote sales); everywhere else, crossing the threshold creates a registration and collection obligation starting from a date the state's own rule specifies, which isn't always the exact day you crossed it.

Set this up once and it runs itself; skip it and you find out about a problem the day a state notice arrives.

• Pull rolling twelve-month sales by state from your billing or e-commerce platform, not calendar-year totals alone, since several states test on a rolling basis.
• Separate marketplace sales from direct sales by state, since marketplace facilitator laws shift the collection duty to the marketplace in most states for marketplace transactions specifically.
• Set an internal alert well below each state's actual threshold, so you have time to register before you're retroactively out of compliance.
• Revisit the list at least quarterly, since state thresholds and rules do change, and a state that dropped its transaction-count prong last year might not be the same state you last checked.

If you sell exclusively through a marketplace like Amazon or Etsy, the marketplace is generally the one collecting and remitting sales tax on those transactions in states with a marketplace facilitator law, which covers most states that have adopted economic nexus. That doesn't erase your own nexus status, though: if you also sell directly through your own site, or through a different channel, your marketplace sales can still count toward whether you've crossed a state's dollar threshold, even though the marketplace is the one actually collecting tax on those specific sales. Registering in a state and then filing a zero-collection return for marketplace-only sales is common and not a mistake, but skipping registration because the marketplace handles it can be the wrong call.

Registering months after crossing a threshold and backdating nothing is one of the more common gaps auditors find, since most states can look back to the date the obligation actually started, not the date you registered. Treating one state's threshold and rules as representative of all of them is another mistake: look-back periods, whether the count includes exempt sales, and whether marketplace sales count toward the threshold all vary by state. And assuming a state without a sales tax on tangible goods also has no obligation for digital products or services is a frequent surprise, since several states tax digital goods or software as a service differently than physical products.

Register with that state's department of revenue promptly once you've confirmed you've crossed its threshold, since most states start counting your obligation from the date you actually crossed it, not the date you got around to registering. Start collecting tax on new sales into that state as soon as you're registered, and talk to a state and local tax advisor about voluntary disclosure options for the exposure between when you crossed the threshold and when you registered, since most states have a program that limits the look-back period in exchange for coming forward voluntarily instead of waiting to be caught.