What is economic nexus for sales tax?

Economic nexus means a state can require you to collect and remit its sales tax based on your sales volume into the state alone — no physical presence required. It was made possible by the Supreme Court's 2018 South Dakota v. Wayfair decision, which overturned the old physical-presence rule.

What are the common economic-nexus thresholds?

The most widely used threshold is $100,000 in sales OR 200 separate transactions into a state in the current or prior year. But thresholds vary: some states use $500,000, some dropped the 200-transaction test entirely, and each measures the period differently. You must check each state where you sell.

Do I owe sales tax if I only sell on Amazon or Etsy?

Usually the marketplace collects and remits for you under marketplace-facilitator laws, so you don't collect on those sales. But those sales may still count toward your economic-nexus threshold, and any sales you make through your own website or other channels are your responsibility to track and remit.

What happens if I should have been collecting sales tax but wasn't?

You become personally liable for the uncollected tax — the state can assess it against your business even though you never charged your customers — plus penalties and interest for every open period. Because unfiled sales-tax returns keep the statute of limitations open, the exposure grows until you register and file, often through a voluntary disclosure agreement.

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State & Local Tax (SALT)

Sales-Tax Economic Nexus After Wayfair: The Rules Every Seller Needs

The 2018 Wayfair decision let states require out-of-state sellers to collect sales tax based on sales volume alone. Thresholds vary by state, marketplace rules add complexity, and the penalties for missing registration compound fast.

SMAART Tax Team

February 24, 2026

6 min read