You probably owe sales tax in more states than you are registered in, and you probably also over-worry about the states where the marketplace already handles it. Both errors come from the same gap: not knowing where you have nexus.
Sales tax for an ecommerce seller reduces to two questions, asked state by state. Do I have nexus here? And if I do, who remits the tax, me or the marketplace? Get those two right for each state you sell into and the rest is mechanics. Get them wrong and you are either sitting on an unregistered liability that compounds quietly, or you are filing returns and collecting tax you never needed to touch.
Most sellers answer neither question deliberately. They registered in their home state, maybe one or two others where a CPA told them to, and left the rest to chance. Then a $4M-revenue brand gets a nexus questionnaire from a state it never thought about, and the back-tax math starts at the date nexus was triggered, not the date the letter arrived.
Economic nexus gets the attention, but physical nexus came first and never went away. You have physical nexus in a state when you have a tangible presence there: an office, an employee, a contractor, or inventory.
That last one matters enormously for Amazon FBA sellers. When Amazon stores your inventory in a fulfillment center, many states take the position that the inventory creates physical nexus for you, the seller, in that state, even if you never chose to send goods there. Amazon's network spans dozens of states. The practical effect: an FBA seller can have physical-nexus exposure in states they have never visited, purely because Amazon redistributed their units.
States have softened enforcement on FBA-inventory nexus over the years, and a few court decisions have pushed back on it, but the position is live in 2026 and varies by state. Verify the current treatment for any state where your FBA inventory sits before assuming you are clear.
The 2018 South Dakota v. Wayfair decision let states tax sellers with no physical presence, based purely on sales volume. Every state with a sales tax now has an economic nexus threshold. Cross it and you owe, full stop.
The common threshold is $100,000 in sales or 200 separate transactions into the state in the current or prior calendar year. But the details differ, and the differences are where sellers trip.
| THRESHOLD PATTERN | EXAMPLE STATES | WHAT TO WATCH |
| $100,000 OR 200 transactions | Many states historically used this | The 200-transaction trigger catches low-priced, high-volume sellers fast |
| $100,000, transaction count dropped | California, New York (with own figures), several others | States have been removing the 200-transaction prong since \~2019 |
| $500,000 | California, New York, Texas (with nuances) | High thresholds; large sellers still clear them easily |
| $250,000 | A handful of states | Mid-tier trigger |
Two traps inside the thresholds. First, some states count gross sales including marketplace sales toward the threshold, even though the marketplace remits the tax. You can cross the threshold on Amazon volume alone and owe a return obligation for your Shopify sales into that state. Second, the measurement period (current year, prior year, rolling 12 months) varies. Treat every threshold figure as verify-current before you rely on it; states adjust these and a few revisit them annually.
This is the rule that saves most sellers the most work, and the one most misunderstand. Marketplace facilitator laws require the marketplace, not you, to collect and remit sales tax on sales it facilitates. Amazon, Walmart, eBay, Etsy, and TikTok Shop all collect and remit on your behalf in essentially every state that has the tax.
What that means in practice:
The accounting consequence is real. The cash that hits your bank from Amazon already has tax stripped out by Amazon. The cash from Shopify includes tax you are holding in trust for the state. If your books do not separate marketplace-facilitated from self-collected, your sales tax liability account is fiction.
A clean setup tracks three things per state: whether you have nexus, the marketplace-facilitated tax (informational, already remitted), and the self-collected tax (a real liability you owe). Blending them is the classic mistake.
ConnectBooks syncs settlement data from Amazon, Shopify, Walmart, eBay, and TikTok Shop and separates marketplace-facilitator tax from self-collected sales tax automatically, so your liability account reflects only what you actually owe. Plans start at $149/mo. See /integrations/amazon-accounting for how the tax fields map into QuickBooks or Xero.
| NEXT STEPKnow exactly which sales tax you owe versus what the marketplace already remitted. ConnectBooks separates the two automatically, starting at $149/mo. See /pricing. |
The states that bite are the ones where you crossed the economic threshold on your own-channel sales and never registered. That liability accrues from the trigger date with interest, and voluntary disclosure agreements exist precisely because catching it yourself is far cheaper than a state catching it.
Generally no. Under marketplace facilitator laws, Amazon collects and remits the tax on sales it facilitates in nearly every state with a sales tax. You usually do not remit it again. You may still have a registration or reporting obligation in some states, and some states count those marketplace sales toward your economic nexus threshold for your own-channel sales, so it is not the same as having no obligation at all.
Historically $100,000 in sales or 200 separate transactions into a state in the current or prior calendar year. Many states have since dropped the 200-transaction prong, and several use higher dollar thresholds like $250,000 or $500,000. Thresholds and measurement periods vary and change, so verify each state's current figure before relying on it.
In many states, yes. When Amazon stores your inventory in a fulfillment center in a state, that state may treat the inventory as physical nexus for you. Because Amazon redistributes units across its network, you can have exposure in states you never chose. Treatment varies by state and has shifted over time, so confirm the current position for each FBA-inventory state.
On Shopify, because you are the seller of record on your own channel. Amazon handles the tax on its facilitated sales. So in a state where you have nexus, Amazon remits your Amazon tax while you collect and remit your Shopify tax yourself. Keep the two streams separate in your books, since only the self-collected portion is a liability you owe.
Reconstruct per-state, per-channel sales by year, compare each year against that year's threshold, and identify states where your own-channel sales crossed the line while you were unregistered. A CPA can then quantify the back tax and, where it makes sense, pursue a voluntary disclosure agreement, which usually limits the lookback period and waives penalties versus waiting for an assessment.
Clean, accurate books make this manageable. Start a free trial of ConnectBooks to get settlement-level accuracy and real margin visibility for your ecommerce business. No credit card required.
Running an e-commerce business comes with plenty of challenges, but ConnectBooks is here to make your life easier. With real-time insights, seamless integrations, and detailed tracking of your profitability and inventory, you can stay ahead of the game. Whether you’re selling on Amazon, Shopify, Walmart, TikTok or eBay, ConnectBooks helps you manage your finances with 100% accuracy and confidence, so you can focus on growing your business.
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