Sales Tax Nexus: The Compliance Trap Growing Ecommerce Brands Walk Into

Nexus — a connection that lets a state require you to collect its sales tax — used to mean physical presence. Since the 2018 Wayfair decision, economic activity alone creates it: most states set thresholds around $100,000 in sales or 200 transactions annually. A Shopify brand doing $3M nationally almost certainly has nexus in a dozen or more states, whether anyone has noticed or not.

Inventory creates nexus too. If you use FBA, Amazon moves your stock into warehouses across the country, and many states treat that inventory as physical presence — a wrinkle that surprises sellers who thought marketplace facilitator laws had them fully covered.

Every state with a sales tax now requires marketplaces like Amazon and Walmart to collect and remit tax on marketplace sales — genuinely good news. But facilitator laws cover the marketplace channel only. Your Shopify store, wholesale accounts, and invoiced sales remain your obligation. And in several states, marketplace sales still count toward your economic threshold, meaning Amazon volume can trigger collection duties on your direct channel.

The sequence matters: first a nexus study (where do you actually have obligations, and since when), then an exposure estimate for past uncollected tax, then a decision on voluntary disclosure agreements — which most states offer with penalty waivers and limited lookback periods — and only then registrations and automated filing through tools like TaxJar or Avalara. Registering first and asking questions later can needlessly surface years of back liability.

The worst strategy is waiting: exposure compounds monthly, and states share data with marketplaces. The second-worst is panic-registering everywhere. If you suspect you have unaddressed nexus, get a study done — it's a fixed-fee project and turns an anxiety into a checklist.