The 2018 Supreme Court ruling in South Dakota v. Wayfair changed US sales tax forever. Before Wayfair, you only had to collect sales tax in states where you had physical presence (nexus). After Wayfair, simply making enough sales into a state creates an obligation — even if you've never set foot there.
What Is Economic Nexus?
Economic nexus means you have a sales tax obligation in a state based purely on your sales volume there — no physical presence required. Every US state with a sales tax now has economic nexus rules.
The Common Thresholds
Most states follow South Dakota's original thresholds: $100,000 in sales OR 200 transactions into that state in a 12-month period. Some states have higher thresholds ($500,000 in California) and some have lower.
Once you cross the threshold, you must: (1) register for a sales tax permit in that state, (2) collect the correct rate from customers, (3) file returns on the state's schedule (monthly, quarterly, or annually based on volume).
How to Find Out If You Have Exposure
- Pull your sales by ship-to state for the last 12 months
- Compare against each state's threshold
- Any state where you've crossed — you likely have an obligation
- Check whether you're in a Streamlined Sales Tax (SST) state for simplified registration
Platforms That Help (and Their Limits)
Shopify, WooCommerce, and Amazon handle sales tax collection automatically once configured — but they don't register you in states, file your returns, or notify you when you've crossed a threshold. That's still your responsibility (or your CPA's).
What Happens If You've Been Out of Compliance?
Voluntary disclosure programs (VDA) exist in most states — you proactively come forward, pay back taxes (often with reduced or waived penalties), and register going forward. Advisory Monks Consulting handles VDAs regularly.