They say the USA is the land of opportunity. And YES, the opportunity for massive revenue is real.
But it is also home to thousands of conflicting tax codes, each with its own registration rules. For international businesses selling into the States, knowing when to register for a sales tax permit can be a massive headache.
This guide explains when international sellers should register in each state, how to identify nexus triggers, and the specific steps to take to be compliant.
Your U.S. sales tax obligation starts the moment your business establishes sales tax nexus.
Sales tax nexus exists when a business’s presence or activity in a state triggers a sales tax obligation. It’s formed when you cross a certain activity threshold, like more than $100,000 in gross sales, obligating you to collect and remit sales tax.
Sales tax nexus can be triggered in many ways, like:
When you need to register for sales tax depends on the nexus trigger your business hits, and the jurisdiction you operate in:
Some jurisdictions also expect you to register for sales tax even if you sell exclusively through a marketplace. This can apply even if the marketplace collects sales tax on your behalf.
Selling from outside the U.S. doesn’t prevent you from triggering sales tax nexus. Neither do treaties or home-country tax rules.
The states also don’t consider your foreign status a reason to delay or avoid sales tax registration.
In other words, as a foreign seller, you’ll still need to register for sales tax if you hit nexus in a state. Focus on where your customers are in the U.S., not necessarily your business address.
Now, let’s talk about the nexus triggers that you, as a foreign seller, need to be aware of.
Physical presence is the traditional sales tax nexus trigger. And unlike other types of nexus, it can be triggered even with one instance of physical presence in the state.
Physical activity is defined in various ways, like:
However, rules vary by state. Some states apply safe harbor rules that exclude limited, temporary physical activities from creating nexus. Others deem even one physical activity or a few hours of presence enough for you to owe sales tax. Check the rules in the states you sell in to understand what it means for you.
Unlike physical nexus, economic nexus is based solely on the volume of your business’s sales or transactions (sometimes both) within the state. Here, you’re mostly looking at whether your sales activity crosses a state’s economic threshold.
Across the country, threshold limits vary, but they tend to fall into two different categories:
It is natural to assume you can close your sales tax permit the moment your sales dip below the threshold in a state. But some states apply a concept called the ‘trailing nexus’. It means a state might require you to keep filing returns for a set period, often a full year or more, after you stop doing business there.
They reason that your marketing or brand presence continues to influence sales even after you physically leave or stop hitting the numbers.
Trailing nexus rules vary by state, and not all states clearly publish their position. Some require continued filing for a defined period, while others have expressly stated they do not apply trailing nexus. When a state has not clearly stated its rule, continue filing zero returns until the account is formally closed to avoid missed filing penalties.
In most of the U.S., one state registration covers every city and county inside it. You sign up with the state, and you are done.
But Home Rule states like Colorado, Louisiana, and Alabama play by different rules. In these areas, local jurisdictions (like specific cities) have the power to administer their own taxes.
While they aren’t the only states with tricky local tax nuances, these Home-Rule areas generally require you to register separately with each local authority. If you miss these local requirements, you’re technically non-compliant, even if your state account is set up correctly.
Once you know where you have sales tax nexus, you’ll have to decide how to handle the paperwork.
You generally have three paths:
You didn't build your company because you have a passion for state statutes. You built it to solve a problem and serve your customers.
But success in the U.S. market comes with sales tax complexity.
At TaxValet, we help you replace the confusion with confidence. Compliance stays intact without adding work to your plate. Registration, filing accuracy, and ongoing liability stop interfering with growth.
If you’re ready to stop worrying about this complex field, let’s talk.
Registering late without a plan for your sales tax is dangerous. By doing so, you open yourself up to potential scrutiny and increased liability. If a state discovers you have been active without registering, they can assess tax, penalties, and interest going back to when your activity first started.
Technically, no, but practically, yes. Most states require electronic payment (ACH) from a U.S. bank. You can sometimes wire funds internationally, but fees are high and errors are common. Services like Payoneer or Wise are often the best middle ground.
No. You do not need to form a U.S. LLC or Corporation. You can register as a foreign entity using your home country's details, though you will need a federal EIN first.
However, you should strongly consider obtaining an Individual Taxpayer Identification Number (ITIN) for a responsible party in your business. While not strictly required by federal law to do business, some states (like Florida and Virginia) effectively block online registration if the responsible party does not have an SSN (Social Security Number) or ITIN (individual Taxpayer Identification Number).
They usually send paper mail to the address on file. Since international mail is slow and unreliable, you must create online logins for every state you register in and check their message centers often.
No. International income tax treaties (like the US-UK treaty) apply to federal income tax, not state sales tax. They offer you no protection here. You will still need to register for sales tax in a relevant state if you trigger nexus there.
If you have inventory in multiple states (even through Amazon FBA), you likely have physical nexus in all those states.