Tax

Multi-State Sales Tax for Remote and Online Businesses

Wayfair turned every remote-sale state into a potential tax obligation. Here's how to know where you owe, register, and stay clean.

By Aparna Devalla, CPA3 min · 5 slidesUpdated May 4, 2026

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Why This Matters Now

South Dakota v. Wayfair (2018) eliminated the physical-presence requirement. States can now require remote sellers to collect sales tax based purely on sales volume or transaction count.
If you sell SaaS, e-commerce, or digital goods to customers across the country, you may have economic nexus in 10–45+ states without ever setting foot there.
Penalties for non-collection are not just back tax; they include interest, failure-to-file penalties, and sometimes personal liability for owners and officers.
States are aggressively pursuing remote sellers. Audit notices for non-collection are routine.

Economic Nexus Thresholds

Most states use $100K in sales OR 200 transactions in the prior or current calendar year as the trigger.
California: $500K in sales (no transaction count). Texas: $500K. New York: $500K AND 100 transactions.
Some states (Kansas, until recently) had no threshold: any sale created nexus.
Marketplace facilitator laws (Amazon, Etsy, eBay) often shift the collection burden to the platform, but you may still need to register and file zero returns.
The threshold is per-state and resets annually, so track sales by state continuously, not just at year-end.

Physical Nexus Still Counts

An office, employee, contractor, or warehouse in a state creates physical nexus regardless of sales volume.
A remote employee working from their home in another state creates nexus in that state for payroll AND sales tax.
Inventory stored in a state (e.g., Amazon FBA warehouses) creates nexus.
Trade shows, sales calls, and even significant marketing presence can trigger nexus in some states.
Affiliate marketers and click-through nexus rules complicate this further.

What to Do When You Hit a Threshold

Register with the state's department of revenue, usually online; it takes a few days.
Set up sales tax collection in your billing system (Stripe Tax, Avalara, TaxJar, and Anrok all work).
File returns on the cadence the state requires (monthly, quarterly, or annually based on volume).
If you discover historical exposure, voluntary disclosure agreements (VDAs) often waive penalties and limit lookback periods to 3–4 years instead of unlimited.
Don't ignore it: once a state finds you, lookback can extend to whenever nexus began.

Common Mistakes

Assuming SaaS isn't taxable. It is in 20+ states (NY, TX, WA, PA, MA, etc.), and the list grows annually.
Forgetting to file zero returns once registered: auto-billed minimums and late filing penalties pile up fast.
Treating exempt sales (resale, government, nonprofit) as non-taxable without collecting and retaining exemption certificates.
Mixing taxable and non-taxable services on the same invoice without itemizing; most states will tax the entire line.
Need help with a multi-state nexus review? Rubric Financial handles nexus analysis, registration, and ongoing filings.

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Educational content, not tax, legal, or accounting advice. Confirm with a CPA before acting.

On StartupCFO.AI: The post-Wayfair sales tax nexus matrix

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