Before 2018, selling online to customers in other states was relatively simple from a sales tax perspective — if you didn’t have a physical presence there, you generally didn’t owe that state’s sales tax. The Supreme Court’s 2018 ruling in South Dakota v. Wayfair changed everything.
Today, online businesses that reach sales thresholds in other states — even with no physical presence — have sales tax obligations in those states. For Utah-based e-commerce businesses, this means the sales tax map grew from one state to potentially dozens, overnight.
FJ & Associates, PLLC helps Utah online businesses assess their nexus exposure, register in required states, and manage ongoing multi-state sales tax compliance efficiently.
Call us: (801) 927-1337 | Schedule a consultation →
What Is Sales Tax Nexus?
Nexus is the connection between your business and a state that creates a legal obligation to collect and remit that state’s sales tax. There are two types:
Physical nexus — created by a tangible presence in the state:
- Office, store, warehouse, or any business location
- Employees, contractors, or sales representatives working in the state
- Inventory stored in a fulfillment center in the state (including Amazon FBA)
- Attending trade shows or in-person events in the state
Economic nexus — created by sales volume alone (post-Wayfair):
- Most states trigger at $100,000 in sales OR 200 transactions in a 12-month period
- Some states use sales volume only (California: $500,000 threshold)
- Some states use transactions only (eliminated by most states after Wayfair)
- Thresholds are measured on a rolling or calendar-year basis depending on the state
State-by-State Economic Nexus Thresholds
| State | Sales Threshold | Transaction Threshold |
|---|---|---|
| Utah | $100,000 | 200 |
| California | $500,000 | None |
| Texas | $500,000 | None |
| New York | $500,000 | 100 |
| Florida | $100,000 | 200 |
| Washington | $100,000 | None |
| Colorado | $100,000 | None |
| Nevada | $100,000 | 200 |
| Arizona | $100,000 | None |
| Oregon | No sales tax | — |
| Montana | No sales tax | — |
| New Hampshire | No sales tax | — |
| Delaware | No sales tax | — |
Thresholds and rules change frequently. Always verify current requirements before making compliance decisions.
Amazon FBA and Marketplace Facilitator Rules
If your business sells through Amazon FBA (Fulfillment by Amazon), your inventory is stored in Amazon warehouses across the country — creating physical nexus in every state where Amazon holds your inventory, often without your knowledge.
Additionally, most states have enacted marketplace facilitator laws that shift the responsibility for collecting and remitting sales tax from the individual seller to the marketplace platform (Amazon, eBay, Etsy, Walmart Marketplace). If 100% of your sales occur through qualifying marketplace facilitators, your direct filing obligations may be significantly reduced — but physical nexus obligations from FBA inventory remain.
We assess your Amazon FBA exposure and advise on your actual net compliance obligations after marketplace facilitator rules are applied.
Product Taxability — Not Everything Is Taxable Everywhere
Before calculating your exposure, you need to know whether your product or service is taxable in each state. Taxability rules vary significantly:
- Digital products (software downloads, SaaS, e-books, streaming): taxable in some states, exempt in others
- Clothing: exempt in some states (Pennsylvania, New Jersey), taxable in others
- Food: grocery food often exempt; prepared food taxable; the line varies by state
- Professional services: generally exempt in most states; taxable in a handful
Selling a product that’s exempt in a state you have nexus in means you don’t need to register there — but you need the documentation to support the exemption if audited.
Getting Into Compliance
If you have unregistered nexus in multiple states, a structured compliance approach matters:
- Step 1 — Nexus study: Identify every state where you have physical or economic nexus based on prior 12 months of sales data.
- Step 2 — Taxability analysis: Confirm which of your products or services are taxable in each nexus state.
- Step 3 — Registration: Register for a sales tax permit in every state where you have a nexus obligation. Most states charge $0–$25 for registration.
- Step 4 — Configure your sales platform: Set up your e-commerce platform (Shopify, WooCommerce, BigCommerce) or marketplace settings to collect the correct tax rates.
- Step 5 — File and remit: Begin filing on the frequency assigned by each state — monthly, quarterly, or annually based on sales volume.
- Step 6 — Prior period exposure: If you’ve been selling without collecting for prior years, evaluate Voluntary Disclosure Agreement eligibility in each state to limit back-tax exposure.
Sales Tax Nexus FAQs
I just crossed the $100,000 threshold in a new state. How quickly do I need to register?
Most states require registration before or immediately upon crossing the threshold. Some states provide a short grace period. We recommend initiating registration within 30 days of crossing any state’s threshold.
Do I owe back sales tax for years before I registered?
Potentially. States can assess back taxes for the periods you had nexus but weren’t registered. VDA programs typically limit lookback to 3 years and waive penalties for proactively disclosing. Contact us before filing anything — the approach matters.
My business only sells through Etsy. Do I still need to register in other states?
If Etsy qualifies as a marketplace facilitator in a given state (it does in most), Etsy collects and remits the sales tax on your behalf. You may still have registration obligations in states where you have physical nexus, but your direct filing exposure for marketplace sales is typically eliminated.
What software helps manage multi-state sales tax?
TaxJar, Avalara, and Vertex are the leading sales tax automation platforms for e-commerce businesses. They integrate with Shopify, WooCommerce, Amazon, and other platforms to calculate rates, collect tax, and file returns automatically. We help clients evaluate and implement the right platform for their volume and complexity.
Find Out Where Your Online Business Owes Sales Tax
Call: (801) 927-1337
Email: admin@cpaone.net
Visit: 612 N Kays Dr Suite 120, Kaysville, UT 84037
Schedule a Sales Tax Nexus Assessment →
See also: Multi-State Tax Compliance | Utah Sales Tax Compliance | Utah Business Tax Services
Missy Dennis, CPA | Partner | FJ & Associates, PLLC | Kaysville, Utah
Missy holds a Master of Accounting degree from the University of Utah and is a licensed Certified Public Accountant. She is committed to providing clear, accurate, and actionable guidance so clients can navigate complex financial decisions with confidence. With more than twenty years of public accounting experience, Missy Dennis specializes in: Tax preparation and tax advisory; Bookkeeping strategy alignment; Estate and trust taxation; Audit and consulting services; Low-income housing tax credits; Non-profit accounting; Small- and mid-sized business advisory.
