Cross-Border Tax · Guide
US sales tax for Canadian e-commerce sellers: economic nexus after Wayfair
Since the 2018 Wayfair decision, a Canadian seller can owe US state sales tax with no physical presence at all: crossing a state’s economic nexus threshold — commonly US$100,000 of annual sales into that state, though exact rules vary — obliges you to register, collect, and file there. Marketplace orders on Amazon are largely collected for you under marketplace facilitator laws; sales on your own Shopify store are yours to handle.
By the AnalytIQ Accounting team · Last reviewed: August 12, 2026
What changed with Wayfair
Until 2018, a state could only make you collect its sales tax if you had a physical presence there — an office, staff, or inventory. South Dakota v. Wayfair ended that: the US Supreme Court allowed states to impose collection duties based on economic nexus — sales volume alone. Every state that has a sales tax now has an economic nexus law, and the rules apply to foreign sellers exactly as they apply to American ones. A Canadian corporation shipping from Mississauga can owe Georgia sales tax without ever touching Georgia.
Five states — New Hampshire, Oregon, Montana, Alaska, and Delaware — have no statewide sales tax, though Alaska's local jurisdictions run their own regime. The other forty-five, plus DC, each set their own threshold, base, and rates. That patchwork is the whole compliance problem.
The thresholds, state by state (roughly)
The Wayfair-era baseline was US$100,000 in sales or 200 separate transactions into a state, measured over the current or previous calendar year. States have drifted from that baseline ever since — many have repealed the transaction count — so treat this table as a map, not a rulebook, and confirm a state's current rules before registering:
| Threshold style | Where you see it |
|---|---|
| US$100,000 in annual sales | The most common test, used by the majority of states |
| US$500,000 | California, New York, and Texas — the biggest markets set a higher bar |
| US$250,000 | A small group, including Alabama and Mississippi |
| 200-transaction test | A shrinking list — many states have repealed the count, but where it survives, 200 small orders can create nexus on very little revenue |
One more trigger predates all of this: inventory is physical presence. Stock sitting in a US fulfilment warehouse — which is exactly what Amazon FBA does with it — can create nexus in that state regardless of your sales volume.
Marketplace facilitator laws: what Amazon handles for you
Every state with a sales tax now also has a marketplace facilitator law (Missouri was the last, from January 2023). These laws shift collection to the marketplace itself: Amazon calculates, collects, and remits state sales tax on your marketplace orders, and Walmart, Etsy, and eBay do the same. For a pure-marketplace Canadian seller, that removes most of the day-to-day collection burden.
It does not remove all of it. Marketplace sales still count toward your nexus thresholds in many states, some states expect registration or returns from you even where the facilitator collects, and FBA inventory keeps creating physical nexus in the background. The full Amazon picture — sales tax, US income tax exposure, and the Canadian side — is what our Amazon seller accounting service covers.
Shopify is not a marketplace — direct sales are on you
A Shopify store is your own channel, so facilitator laws do not apply: once you have nexus in a state, collecting and remitting on those orders is your job. Shopify's tax tools will calculate the right rate at checkout, but they do not register you, file your returns, or decide where you have nexus — sellers regularly confuse "Shopify shows tax" with "Shopify handles tax." Mixed-channel sellers get the worst of both worlds: marketplace sales quietly pushing them over thresholds that then apply to their direct sales. We unpack that on our Shopify seller accounting page.
The registration cascade, managed sanely
Once a threshold is crossed, the sequence in each state is: register for a permit, start collecting from the effective date, then file returns on that state's calendar — including nil returns, because a missed zero-dollar filing still draws notices. You do not need a US company to do any of this; states register Canadian businesses, typically using a US tax ID. Practical discipline matters in both directions: registering everywhere "to be safe" buys you dozens of filing obligations you may not need, while ignoring a crossed threshold means the uncollected tax, penalties, and interest come out of your margin — and if history is already messy, voluntary disclosure programs can cap the lookback before a state finds you first.
The Canadian side stays simple by comparison: US-bound sales are zero-rated exports for GST/HST, and state sales tax you collect is never your revenue. We track thresholds from your sales data, register where it is actually warranted, and keep the filings running — so the cascade stays boring.
Source: Streamlined Sales Tax Governing Board — remote seller guidance.
Common questions.
Amazon already collects sales tax on my orders — am I done?
For marketplace orders, mostly yes. But marketplace sales can still count toward nexus thresholds, some states want registration or returns from you anyway, FBA inventory creates physical nexus, and anything you sell on your own site is entirely your responsibility.
Do I need a US company to register for state sales tax?
No. States register foreign businesses directly — a Canadian corporation can hold US sales tax permits, typically using a US tax ID such as an EIN, which is available without forming a US entity. Whether a US entity makes sense is a separate question with its own traps.
I crossed a threshold two years ago and never registered. What now?
The exposure is real but manageable: tax you never collected, plus penalties and interest, accrues until you act. Most states offer voluntary disclosure agreements that limit the lookback and reduce penalties — usually a far better path than quietly registering prospectively and hoping. Get advice before contacting any state.
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