Why this matters

Online sellers face state-by-state rules that affect pricing, cash flow, and legal exposure. After the U.S. Supreme Court’s decision in South Dakota v. Wayfair (2018), many states adopted economic nexus rules that require remote sellers to collect sales tax based on sales dollars or transaction counts rather than physical presence (see the decision: https://www.supremecourt.gov/opinions/17pdf/17-494_g3bi.pdf).

Quick checklist — what you must do

  • Determine nexus: check both physical (warehouses, employees) and economic nexus (sales dollars or number of transactions). Many states use thresholds such as $100,000 in sales or 200 transactions, but limits vary — confirm with each state’s tax department. (See guidance on how nexus is established: https://finhelp.io/glossary/how-state-sales-tax-nexus-is-established-for-remote-sellers/.)
  • Register for a sales tax permit in states where you have nexus. Registration is required before collecting tax in most states. (See registration steps: https://finhelp.io/glossary/state-sales-tax-permits-registration-and-compliance-steps/.)
  • Charge the correct tax: collect the sales tax rate that applies to the buyer’s shipping address (destination-based states) or, where applicable, the seller’s location (origin-based states).
  • Apply exemptions correctly: document resale certificates and other exemptions; keep certificates on file.
  • Remit and file returns: follow each state’s filing frequency (monthly, quarterly, or annual) and remit collected tax by the due date.
  • Keep records for at least three to seven years depending on state requirements and be ready for audits.

Marketplace facilitators and third-party platforms

Most states now require marketplace facilitators (Amazon, Etsy, eBay, etc.) to collect and remit sales tax on behalf of sellers in transactions processed through their platforms. If you sell through a marketplace, confirm whether the marketplace collects tax or whether you remain responsible. For more on marketplace rules, see our explainer: Understanding State Sales Tax on Marketplace Facilitators.

Practical examples

  • Small apparel seller in Oregon (no state sales tax) ships to Washington: if sales to Washington exceed that state’s economic-nexus threshold, the seller must register with Washington, collect sales tax at the destination rate, and remit returns to Washington.
  • Electronics retailer in New York selling nationwide should use automated tax software to apply correct rates, manage exemption certificates, and produce filing reports for each state.

Common mistakes to avoid

  • Assuming no physical presence means no obligation. Economic nexus rules can still apply.
  • Failing to register before collecting tax or charging the wrong rate.
  • Ignoring marketplace-facilitator rules and double-counting or missing collections.

Practical tips from my experience

In my practice advising small e-commerce businesses, I see the fastest compliance wins come from: (1) running a nexus analysis annually, (2) using a tax automation tool integrated with your checkout, and (3) centralizing exemption certificates in one place. These steps cut audit risk and reduce manual errors.

When to consult a professional

If you have multistate sales, a mix of physical and digital products, or complex exemption questions, consult a tax professional or multistate compliance specialist. State laws change frequently — consult state revenue sites or a licensed advisor for business-specific guidance.

Selected authoritative sources

Internal resources

Professional disclaimer

This article is educational and does not provide legal or tax advice. For advice tailored to your situation, consult a licensed tax advisor or your state revenue department.