Economic Nexus

This is why a Texas Shopify brand with no warehouse outside Dallas can owe registrations in a dozen states. Sell $130,000 of product into California in a rolling year and California expects you registered and collecting. Sell $40,000 into a $100,000-threshold state and you're fine there, for now. The thresholds reset and roll, so this is a monitoring problem, not a one-time checkup.

Where the rule came from

Before June 2018, a state could only make you collect its sales tax if you had a physical presence there: a warehouse, an office, an employee. South Dakota v. Wayfair overturned that. The Supreme Court upheld South Dakota's law requiring remote sellers over $100,000 in sales or 200 transactions to collect, and within two years every sales-tax state had passed a version. Most states have since dropped the 200-transaction test because it swept in tiny sellers; the dollar threshold is what matters now.

Thresholds by state, in broad strokes

Most states use $100,000 in sales into the state, measured over the current or previous calendar year. California, Texas and New York sit at $500,000. A few, like Alabama and Mississippi, use $250,000. Some states measure gross sales including exempt and marketplace orders; others count taxable direct sales only, and that detail decides whether a $300,000 Amazon seller with $60,000 of Shopify sales into Florida has crossed anything. Florida excludes marketplace sales from your count; other states include them. There's no shortcut for reading each state's definition, which is why the monitoring belongs in a system rather than a memory.

What crossing the line requires

Register for a sales tax permit as a remote seller, start collecting on direct-channel orders shipped into the state, file returns on the schedule the state assigns, and remit. Most states give you until the first day of the month after you cross; some give longer. Registration also puts you on the state's radar for other filings, which brings the two traps below.

First, some states count marketplace sales toward the threshold even though the marketplace facilitator remits the tax on those orders, so your Amazon volume can push your Shopify channel over the line. Second, crossing a sales tax threshold sometimes triggers other obligations, like income or franchise tax filings, on a separate set of rules. Washington's B&O tax and Texas franchise tax both have their own thresholds.

Economic vs physical nexus

They're independent, and either one alone is enough. Economic nexus comes from sales volume. The other comes from presence, and for FBA sellers that means inventory: Amazon moving your stock into a Kentucky fulfillment center creates a Kentucky obligation from the first dollar of direct sales, no threshold at all. Most multichannel sellers have both kinds in different states, and a proper nexus review maps each state to whichever rule applies.

Common questions

Does the threshold reset every year? It rolls. Most states look at the previous calendar year or the current one; a few use a trailing twelve months. Once registered, dropping back under the threshold usually doesn't release you until you formally close the account.

I only sell on Amazon. Do I have to worry about this? Rarely in dollars. The marketplace collects and remits, so the practical question is whether a state wants a zero-due registration from you, and most sellers handle that state by state as volume grows.

What if I crossed a threshold two years ago and never registered? Don't just register today and hope. Most states run voluntary disclosure programs that cap the lookback and waive penalties, and that route beats an audit finding the gap. We track thresholds from your actual channel data as part of ecommerce tax services, since the books already know where every order shipped.