A practical breakdown of how US sales tax nexus works for Canadian businesses — when you owe it, how to register, and how to stay compliant selling across the border.
Canadian sellers can trigger US sales tax obligations even without a US office, once sales into a state cross that state's economic nexus threshold — commonly around $100,000 in annual sales. Marketplace platforms like Amazon and Walmart often collect tax automatically, but direct sales through your own website usually require you to register, collect, and file yourself. This guide explains nexus rules, registration steps, and common compliance mistakes, with support available from CashBook Accounting's sales tax services.
For Canadian businesses selling into the United States, sales tax is one of the most misunderstood compliance areas — largely because it works nothing like Canada's GST/HST system. There's no single federal sales tax in the US. Instead, each state sets its own rate, rules, and registration threshold, which means a Canadian seller can owe sales tax in one state and nothing at all in the next.
This complexity catches many cross-border e-commerce sellers off guard. A business might be fully GST/HST compliant at home while unknowingly accumulating sales tax exposure across a dozen US states — exposure that can turn into back taxes, penalties, and interest once discovered during an audit or a marketplace's tax report.
This guide walks through exactly how US sales tax nexus applies to Canadian sellers, how marketplace facilitator laws change your obligations, the registration process, and a practical compliance checklist. For related cross-border guidance, see our article on Canadian taxes for e-commerce sellers and how to handle reporting online business income.
"Nexus" is the legal connection between a business and a US state that requires the business to collect and remit that state's sales tax. Before 2018, nexus generally required a physical presence — an office, warehouse, or employee in the state. That changed after the US Supreme Court's South Dakota v. Wayfair decision, which allowed states to require tax collection based purely on sales volume, regardless of physical presence.
This is the change that matters most for Canadian sellers: you don't need a US office, warehouse, or employee to owe US sales tax. Simply selling enough into a state can create an obligation.
Triggered by a physical presence — a warehouse, inventory stored in a US fulfillment center (including Amazon FBA), employees, or contractors working in a state.
Triggered purely by sales volume or transaction count into a state, regardless of physical presence — the standard most Canadian online sellers need to track.
Most states set their economic nexus threshold around $100,000 in annual sales or 200 transactions, but exact numbers and rules vary. Always confirm current thresholds directly with each state, since they change periodically.
| State (example) | Typical Sales Threshold | Transaction Count Rule |
|---|---|---|
| California | $500,000 | No transaction count threshold |
| Texas | $500,000 | No transaction count threshold |
| New York | $500,000 | 100+ transactions (both must be met) |
| Florida | $100,000 | No transaction count threshold |
| Most other states | ~$100,000 | Varies — some also use 200 transactions |
Nearly all US states now have "marketplace facilitator" laws, which shift sales tax collection responsibility onto large platforms rather than individual sellers.
Once registered, ongoing compliance involves three recurring tasks:
Most Canadian sellers use automated tax software (like Avalara or TaxJar) integrated with their sales platform, paired with an accountant who reviews filings and catches discrepancies — an approach we help set up through our sales tax services.
| Mistake | Consequence |
|---|---|
| Assuming no US entity means no US sales tax obligation | Economic nexus applies regardless of business location or entity type |
| Not tracking FBA inventory storage locations | Unexpected physical nexus in states where inventory is warehoused |
| Excluding marketplace sales from nexus calculations | Underestimating when a state threshold is actually crossed |
| Registering in every state "just in case" | Unnecessary filing obligations and fees in states without real nexus |
| Confusing sales tax with customs/import duties | Missing one obligation while overpaying or misreporting the other |
These are two entirely separate obligations that often get conflated by cross-border sellers:
A shipment can clear customs duty-free under USMCA rules and still trigger a state sales tax obligation once sold to a US customer.
CashBook Accounting helps Canadian e-commerce sellers identify US sales tax nexus, register correctly, and stay compliant across every state. Explore our Sales Tax Services or talk to our team today.
Yes, if their sales into a specific US state exceed that state's economic nexus threshold — typically around $100,000 in annual sales — regardless of whether the business has a physical presence in the US.
Not entirely. Amazon collects and remits tax on marketplace sales under facilitator laws, but those sales still typically count toward your economic nexus threshold and may require registration for other obligations.
Most states require an EIN to register for sales tax, even for foreign sellers without a US entity. It can be obtained directly from the IRS without needing a US Social Security Number.
No. Customs duties are paid when goods cross the border based on classification and origin, while sales tax is owed based on nexus and the customer's location — they are separate obligations.
States can assess back taxes, penalties, and interest once unregistered nexus is discovered, often during an audit or through data shared by marketplace platforms.
US sales tax compliance is one of the most common blind spots for Canadian e-commerce sellers expanding south of the border — not because the rules are secret, but because they're fragmented across 45+ taxing states with different thresholds, rates, and filing schedules. Tracking nexus proactively, understanding what marketplaces already handle, and registering only where genuinely required keeps compliance manageable without over-filing.
If you're unsure where your business currently has nexus, CashBook Accounting can run a full nexus review and get your filings set up correctly across every state that applies.
Book a free 30-minute consultation or reach out by email — we'll map your nexus footprint and outline exactly what needs to be registered and filed.