If you sell online or ship inventory across state lines, you likely have tax obligations beyond your home state. Here's what you need to know.
If you store inventory in California (including Amazon FBA warehouses), California considers you a seller with nexus — even if you made $0 in CA sales.
Result: You owe a minimum $800 franchise tax, plus penalties and interest. In one 2026 case, a seller with $9,403 in CA sales + FBA inventory was assessed $800 (minimum) + $483 in penalties.
Washington has no sales tax—it has B&O (Business & Operations) tax instead. If you report marketplace sales (Amazon, Shopify) under Retailing B&O and cross $100,000, you owe B&O tax, not sales tax.
The trap: Amazon collects sales tax in some states, but not B&O. If you report incorrectly or miss the threshold, you're liable for back B&O plus penalties.
Shopify Tax collects sales tax automatically—but only for states where you're already registered. Shopify cannot actually register your business with any state.
The gap: You must register separately in each state. Registration costs $249–$299 per state via services like TaxJar or TaxCloud, and timelines vary by state (30–90 days).
Most sellers register via TaxJar or TaxCloud. Both handle multi-state registration for $249–$299 per state.
Economic nexus laws (starting in 2018 with the Wayfair decision) created a $100K threshold in most states. If you sell to customers in another state and hit $100K+ in annual revenue there, you owe that state's sales tax—even without a physical presence.
Action: Track your sales by state. When you cross $100K in a state, register immediately to avoid back-tax liability and penalties.
Amazon and Shopify collect sales tax in many states, but not all. And collection does not equal registration. You may still need to register and file returns (even if they show $0 owed) in states where you have nexus.
Action: Check your seller central account or Shopify admin for tax collection status by state. Do not assume Shopify handles registration.
Most states require you to register for sales tax if you exceed a sales threshold, even without physical presence. Common thresholds are $100,000–$500,000 in annual sales. A few states use transaction count instead (e.g., 200+ transactions).
Action: Run a quick report in your e-commerce platform to see if you've crossed any thresholds this year.
Not necessarily. Some states let you register and then file a $0 return if you don't actually sell into that state. Other states require quarterly or annual filings. Rules vary by state.
Action: TaxJar and TaxCloud manage filing schedules for you. That's part of why businesses use them—it's cheaper than hiring a CPA for multi-state compliance.
Real-estate investors with multi-state properties (especially rental income) may owe income tax registration as well as sales tax nexus. Additionally, if you have a holding company with multiple LLC entities in different states, each entity's sales may trigger separate nexus obligations.
Learn more about multi-entity tax and compliance strategies →