What Is Sales Tax Nexus?
Nexus is the connection between your business and a state that requires you to collect and remit sales tax. For Amazon sellers, nexus can be created in several ways.
Types of Nexus for Amazon Sellers
Physical Nexus
Created when you have a physical presence in a state. For FBA sellers, this includes inventory stored in Amazon warehouses.
Economic Nexus
Created when your sales exceed certain thresholds, typically:
Marketplace Facilitator Laws
Most states now require Amazon (the marketplace) to collect and remit sales tax on behalf of sellers. However, you may still have registration and filing obligations.
States Where FBA Inventory Creates Nexus
Amazon has fulfillment centers in approximately 30+ states. Common locations include:
Marketplace Facilitator States
As of 2024, nearly all states with sales tax have marketplace facilitator laws. Key points:
What Amazon Does
What You Still Need to Do
Sales Tax Registration Requirements
States Requiring Registration
Even with marketplace facilitator laws, many states still require sellers to register if they have nexus:
Registration Process
Common Compliance Mistakes
Economic Nexus Thresholds by State
| State | Sales Threshold | Transaction Threshold |
|-------|----------------|----------------------|
| California | $500,000 | None |
| Texas | $500,000 | None |
| Florida | $100,000 | None |
| New York | $500,000 | 100 transactions |
| Illinois | $100,000 | None |
| Pennsylvania | $100,000 | None |
Sales Tax Software for Amazon Sellers
| Software | Features | Pricing |
|----------|----------|---------|
| TaxJar | Automated filing, nexus monitoring | $19+/mo |
| Avalara | Enterprise-grade, multi-channel | Custom |
| Sovos | Compliance and filing | Custom |
| QuickBooks | Basic sales tax tracking | Included |
International Seller Considerations
Non-resident Amazon sellers face additional complexity:
Tax Planning Strategies
Monitor Inventory Placement
Amazon's Inventory Placement Service affects where your inventory is stored. Consider implications for nexus.
Regular Nexus Reviews
Review your nexus footprint quarterly as your business grows and Amazon opens new warehouses.
Professional Guidance
Sales tax compliance is complex and penalties can be significant. A tax professional can help you:
How We Can Help
Best Tax And Accounting Solutions provides:
Contact us for a sales tax compliance review.
Frequently Asked Questions
Disclaimer: Information on this website is for general informational purposes only and should not be considered legal, tax, or financial advice. Tax n Ledgers does not guarantee specific tax outcomes. Clients should consult directly with a qualified professional regarding their specific situation.