Overview

Registering to collect sales and use tax is a core compliance step for any e-commerce business that sells taxable goods or services into U.S. states. Since the 2018 Supreme Court decision in South Dakota v. Wayfair, states can require sellers to collect tax based on economic presence rather than just physical presence. That means sellers must watch where their customers live and how much they sell, not only where their warehouse or office is located.

Quick state-by-state checklist (how to use it)

  1. Identify possible nexus triggers
  • Physical presence: store, office, warehouse, employee, or regular trade show activity in the state.
  • Economic nexus: crossing a state’s sales dollar or transaction threshold in a 12-month period.
  • Marketplace/third-party facilitators: many marketplaces (Amazon, Etsy) collect tax on behalf of sellers in some states—check if this applies to your sales.
  • Affiliate or click-through nexus: referral relationships or in-state affiliates can create obligations.
  1. Monitor sales by state monthly
  • Run gross-sales and transaction reports by destination state. Use your shopping cart, payment processor, or an automated sales-tax tool.
  1. Check each state’s registration trigger
  • Look up the state Department of Revenue (DOR) page for the official threshold and registration form. State rules vary and change; always confirm on the DOR site.
  1. Register before you collect
  • If you meet a state’s nexus test, register for a sales tax permit with that state DOR and begin collecting on taxable sales from the effective date the state requires.
  1. File returns and keep records
  • Filing frequency depends on expected tax liability (monthly/quarterly/annual). Keep invoices, exemption certificates, and nexus analyses for at least three to seven years.
  1. Reassess annually (or after growth events)
  • Thresholds and business activity change. Re-run your state sales reports after major customer growth, new fulfillment arrangements, or adding marketplaces.

Examples and practical notes

  • Wayfair impact: After South Dakota v. Wayfair (2018), states adopted economic nexus rules. Most states define economic nexus as a dollar or transaction threshold measured over the prior 12 months; thresholds vary by state.

  • Marketplace facilitators: Many states require marketplaces to collect tax for marketplace sellers. If a marketplace collects, you may not need to register in that state for sales processed through that platform—yet you still should verify whether reporting or separate registration is required.

Professional tips I use with clients

  • Automate reporting: I recommend sales tax automation (e.g., tax engines or accounting integrations) to flag states where you’re approaching thresholds and to produce destination reports.
  • Use exemption certificates: For B2B or resale sales, collect and centrally store state-specific exemption certificates (e.g., resale certificates) and record the buyer’s tax ID.
  • Plan for nexus from fulfillment: Using third-party logistics (3PL) or Fulfillment by Amazon can create nexus in the states where inventory is stored. Review your fulfillment footprint whenever you add or move warehouses.

Common mistakes to avoid

  • Relying solely on “no physical presence” as a defense—economic nexus is often enough.
  • Not tracking transaction counts as well as dollar amounts—some states use a transactions threshold.
  • Failing to review marketplace facilitator rules—these can change reporting and collection obligations.

Where to find state-specific registration steps

Start with each state’s DOR website to confirm thresholds and to complete a sales tax permit application. For practical guidance on when and how to register, see our related guides:

Authoritative resources

  • U.S. Supreme Court, South Dakota v. Wayfair (2018).
  • Individual state Departments of Revenue (use each state’s official site for registration). Example: California Department of Tax and Fee Administration (CDTFA).
  • Internal Revenue Service (for federal tax interactions) — https://www.irs.gov

Disclaimer

This article is educational and does not constitute tax or legal advice. State rules differ and change—consult a qualified tax professional for guidance tailored to your business.

Notes on accuracy

Thresholds and registration procedures vary by state and can change. Use this checklist to identify steps; always verify the current thresholds and registration links on the relevant state DOR site.