US State Sales Tax Registration for Ecommerce Sellers: Complete Guide

The United States does not have a national sales tax. Instead, 45 states plus the District of Columbia impose their own sales taxes, each with different rates, rules, and registration requirements. Since the Supreme Court's 2018 South Dakota v. Wayfair decision, states can require sales tax collection from out-of-state sellers, including international sellers, who exceed certain economic nexus thresholds. For Taiwan brands selling in the US through Amazon, Shopify, Walmart, or their own website, understanding and complying with state sales tax obligations is not optional: failure to collect and remit required sales taxes can result in back-tax assessments, penalties, interest, and even loss of the ability to do business in a state.

The good news for sellers on marketplace platforms is that marketplace facilitator laws now cover the majority of marketplace sales. As of 2025, all 45 states with sales tax plus the District of Columbia have enacted marketplace facilitator laws requiring marketplaces like Amazon, Walmart, eBay, and Etsy to collect and remit sales tax on behalf of third-party sellers for sales made through their platforms. This means Amazon collects and remits sales tax on your Amazon sales in all applicable states. However, marketplace facilitator laws do not cover sales made through your own website (Shopify, WooCommerce, direct-to-consumer) or sales to wholesale customers, which remain your responsibility to manage.

Economic nexus is the legal threshold that triggers a sales tax collection obligation in a state. Most states adopted the South Dakota standard of USD 100,000 in sales or 200 transactions in the state within a calendar year or the previous 12-month period. However, several states have different thresholds: Texas requires USD 500,000, California uses USD 500,000, and New York uses USD 500,000 or 100 transactions. A Taiwan brand selling USD 150,000 per year through its own Shopify store to US customers will likely exceed the nexus threshold in multiple states and must register, collect, and remit sales tax in each of those states.

The financial risk of non-compliance is substantial. States can assess back taxes for the entire period you should have been collecting (typically 3 to 7 years, depending on the state's statute of limitations), plus penalties (typically 10 to 25 percent of the unpaid tax) and interest (typically 1 to 1.5 percent per month). A Taiwan brand with USD 500,000 in annual direct website sales that failed to register in states where it had nexus could face a back-tax assessment of USD 30,000 to USD 50,000 across multiple states, plus USD 10,000 to USD 20,000 in penalties and interest. Registering proactively is far less expensive than dealing with state tax audits reactively.

Start by pulling your sales data by state for the previous 12 months. For Amazon sales, download the Sales Tax Report from Seller Central (Reports > Tax Document Library). For Shopify sales, export the Sales by Billing Location report. For each state, calculate total gross sales and total number of transactions. Compare these figures against each state's economic nexus threshold. Any state where you exceed the threshold requires registration. As a practical shortcut, if your total US sales exceed USD 500,000 annually through any combination of channels, you likely have nexus in at least 15 to 25 states.

Physical nexus also applies in addition to economic nexus. Storing inventory in a state creates physical nexus. Amazon FBA sellers have inventory stored in Amazon fulfillment centers across multiple states, which creates physical nexus in every state where Amazon stores your inventory. Amazon's Inventory Event Detail report shows which states your inventory passed through. Even if your sales in a particular state are below the economic nexus threshold, having FBA inventory stored there triggers a registration obligation. This is the most commonly overlooked nexus trigger for international Amazon sellers.

States without sales tax are Alaska, Delaware, Montana, New Hampshire, and Oregon. You have no sales tax obligations in these five states. However, Alaska allows local jurisdictions to impose sales taxes (some Alaska boroughs charge up to 7.5 percent), so sales to Alaska addresses may still have local tax obligations depending on the delivery location. For practical purposes, focus your registration efforts on the 45 states plus DC that impose statewide sales tax, prioritizing states where your sales volume is highest.

After identifying your nexus states, categorize them by priority: Tier 1 states are those where you exceed the nexus threshold and have meaningful sales volume (register immediately), Tier 2 states are those where you are approaching the threshold (monitor monthly and register when the threshold is reached), and Tier 3 states are those where sales are minimal and well below the threshold (no action needed). Most Taiwan brands with annual US sales of USD 200,000 to USD 1 million will need to register in 10 to 30 states. Brands with sales above USD 1 million should consider registering in all 45 states plus DC to eliminate monitoring complexity.

Sales tax registration is completed through each state's Department of Revenue, Department of Taxation, or equivalent agency. The process involves completing an application form, providing business identification information (EIN or ITIN for international sellers, business name, business address), and in some states, posting a surety bond. Most states offer online registration through their websites, with processing times of 1 to 4 weeks. Some states (California, Texas, New York) require additional documentation for international sellers, including a copy of the IRS EIN confirmation letter and a US mailing address.

The Streamlined Sales Tax Registration System (SSTRS) at sstregister.org allows you to register in 24 participating states through a single online application. Participating states include Indiana, Iowa, Kansas, Michigan, Minnesota, Nebraska, Nevada, New Jersey, North Carolina, North Dakota, Ohio, Oklahoma, Rhode Island, South Dakota, Tennessee, Utah, Vermont, Washington, West Virginia, Wisconsin, and Wyoming, among others. The SSTRS registration is free and typically processed within 2 to 3 weeks. After SSTRS registration, you will receive separate registration confirmations and filing instructions from each state.

Non-SSTRS states (California, Texas, New York, Florida, Illinois, Pennsylvania, and others) require individual state registration. California registration is done through the California Department of Tax and Fee Administration (CDTFA) at cdtfa.ca.gov, requires a USD 0 fee but may require a security deposit of up to USD 50,000 for high-volume sellers. Texas registration is through the Comptroller of Public Accounts at comptroller.texas.gov. New York registration is through the Department of Taxation and Finance at tax.ny.gov. Each state has its own form, requirements, and processing timeline.

After registration, each state assigns you a sales tax permit number and a filing frequency (monthly, quarterly, or annually, based on your expected sales volume). Filing frequency determines how often you must submit a sales tax return and remit collected taxes. High-volume states typically assign monthly filing, while low-volume states assign quarterly or annual filing. You must file returns by the due date even if you had zero sales in the period (zero returns). Late filing penalties apply even for zero returns. The total number of annual filings across all registered states can range from 50 to 200, which is why most Taiwan brands use automated sales tax software to manage compliance.

Manual sales tax compliance across 20 to 45 states is impractical for any ecommerce business. Automated sales tax platforms calculate the correct tax rate at checkout, apply product-specific exemptions, file returns, and remit payments to each state. The three leading platforms are TaxJar (now part of Stripe Tax), Avalara AvaTax, and Vertex. Pricing ranges from USD 19 per month (TaxJar basic, up to 200 orders per month) to USD 300 to USD 1,000 per month (Avalara, for multi-channel sellers with high volume). The platform connects to your ecommerce systems (Shopify, WooCommerce, Amazon via API) and automates the entire process.

For Amazon-only sellers, the marketplace facilitator framework means Amazon handles sales tax collection and remittance for all marketplace sales. However, you still need to register in states where you have nexus (Amazon collects on your behalf but some states require the seller to hold a permit). Additionally, if you sell through FBA Multi-Channel Fulfillment to non-Amazon orders, those sales are not covered by Amazon's marketplace facilitator obligations and you must collect and remit tax yourself. Set up your automated sales tax platform to handle MCF orders and any direct website sales.

Product taxability varies by state. While most tangible goods are taxable in most states, dietary supplements and food products have special tax treatment. Some states tax supplements as tangible personal property (standard rate), while others exempt them as food (zero rate or reduced rate), and others have specific supplement tax rules. For example, New York exempts dietary supplements from sales tax, but Texas taxes them at the standard 6.25 percent state rate plus local taxes. Your automated sales tax platform should be configured with the correct product tax codes (Taxability Information Codes or TICs) for each product to ensure accurate collection.

Budget for sales tax compliance costs as an ongoing operational expense. Software platform fees (USD 250 to USD 1,000 per month), initial registration (USD 50 to USD 150 per state, or USD 1,000 to USD 3,000 total for 20 to 45 states through a service provider), and annual compliance management (either staff time or outsourced to a tax compliance service at USD 100 to USD 300 per state per year for filing services). Total annual cost for a Taiwan brand selling across 20 to 30 states is approximately USD 5,000 to USD 15,000, which is a small fraction of the potential penalty exposure from non-compliance. Treat sales tax compliance as a cost of doing business in the US market, not an optional expense.

The most common mistake is assuming that Amazon's marketplace facilitator collection eliminates all sales tax obligations. While Amazon collects and remits on marketplace sales, sellers still have registration obligations in nexus states, must file returns in some states even when Amazon handles collection, and are fully responsible for sales tax on non-marketplace channels. Do not conflate marketplace facilitator collection with complete compliance.

The second common mistake is failing to register before exceeding nexus thresholds. States expect registration before or at the time the threshold is reached, not months later. If you discover you exceeded the nexus threshold in a state 6 months ago, you technically owe back taxes plus interest for the intervening period. Many states offer Voluntary Disclosure Agreements (VDAs) that reduce or eliminate penalties for sellers who proactively come forward. If you have uncollected sales tax liability in any state, consult a sales tax attorney or service provider about VDA options before registering, as registering without a VDA may trigger a full back-assessment.

The third mistake is using the wrong tax rates. Sales tax rates in the US are a combination of state rate plus county rate plus city rate plus special district rates, and the applicable rate depends on the ship-to address. A single state can have hundreds of different combined rates. For example, California's combined rate ranges from 7.25 percent to 10.75 percent depending on the delivery address. Never use a flat state rate for all addresses within a state. This is another reason automated sales tax software is essential: it calculates the precise rate for every address using regularly updated rate databases.

The fourth mistake is ignoring sales tax on wholesale and B2B transactions. While many B2B sales are exempt from sales tax when the buyer provides a valid resale certificate, the exemption is not automatic. You must collect and retain a copy of the buyer's resale certificate before selling tax-free. If you sell to a wholesale customer without obtaining a resale certificate and a state audits your records, you will owe the uncollected sales tax as if the sale were a retail transaction. Implement a resale certificate collection process for all wholesale customers and store certificates in an accessible filing system.