US Sales Tax Nexus for Amazon FBA Sellers: Which States You Owe Tax In

US sales tax is one of the most misunderstood compliance areas for Amazon FBA sellers — both those based in the United States and international sellers who ship inventory to US fulfilment centres. Most sellers either panic about owing tax in dozens of states, or completely ignore the issue assuming Amazon handles everything. Both reactions are wrong, and both can be costly.

The truth is more nuanced and more manageable than most guides suggest. Amazon does handle sales tax collection and remittance for marketplace sales in all 50 states under Marketplace Facilitator laws — but there are specific situations where you still need your own state sales tax registration. Understanding exactly when Amazon covers you and when you need to act for yourself is what this article covers clearly and completely.

What is Sales Tax Nexus?

Nexus is the legal term for a sufficient connection between your business and a US state that triggers a sales tax obligation in that state. Before the 2018 Supreme Court ruling in South Dakota v. Wayfair, nexus was almost exclusively physical — you had nexus in a state if you had a physical presence there such as an office, employees or a warehouse.

The Wayfair decision changed this fundamentally. It established that states can impose sales tax obligations on out-of-state sellers based purely on economic activity — selling a certain dollar amount or number of transactions into a state — even with no physical presence at all. This is called economic nexus and it applies to every seller, including international sellers and Amazon FBA sellers.

The two types of nexus that affect Amazon FBA sellers

• Physical nexus: Created when you have a physical presence in a state. For Amazon FBA sellers, this happens automatically when Amazon stores your inventory in their fulfilment centres in a given state. Amazon has fulfilment centres in over 20 states, meaning your inventory may be creating physical nexus in states you have never visited and may not even be aware of.
• Economic nexus: Created when your sales into a state exceed the economic nexus threshold set by that state. Most states use $100,000 in sales or 200 transactions per year as their threshold, though these vary. Once you exceed the threshold, you have nexus in that state regardless of whether you have any physical presence there.

The Marketplace Facilitator Law: When Amazon Handles It For You

This is the section that most sellers either do not know about or misunderstand — and it is the most important part of understanding your actual US sales tax obligations as an Amazon seller.

As of 2022, all 50 US states with a sales tax have enacted Marketplace Facilitator laws. Under these laws, Amazon — as the marketplace — is legally responsible for collecting and remitting sales tax on transactions made through its platform. Amazon does this automatically on every sale. You do not collect it, you do not remit it, and you do not file returns for it. Amazon handles this entirely.

When You Actually Need Your Own Sales Tax Registration

Given that Amazon handles retail marketplace tax, many FBA sellers wonder whether they need any sales tax registration at all. The answer for most pure retail Amazon sellers is: possibly not for Amazon sales specifically. But there are clear situations where you do need your own state registration regardless.

1. Buying wholesale: the resale certificate requirement

This is the most common reason sellers come to us for state tax registration. When you purchase products from US brands, distributors or wholesalers for resale, those suppliers are legally required to charge you sales tax on your purchase — unless you provide them with a valid resale certificate proving you are a registered reseller in that state.

Without a resale certificate, you pay sales tax on your wholesale purchases. Since you will then also collect sales tax when you sell those products at retail (through Amazon or any other channel), you end up paying tax twice on the same goods — once when you buy and once when you sell. For high-volume sellers buying significant wholesale quantities, this double taxation can represent a substantial unnecessary cost.

To obtain a resale certificate, you must first register for a sales tax permit in the state where the transaction occurs. The registration gives you a permit number which is the foundation of your resale certificate. Major brands and distributors will not process your account as a tax-exempt reseller without valid documentation.

2. Selling through your own website or Shopify store

If you sell through your own website alongside your Amazon presence, the marketplace facilitator law does not apply. You are the seller of record, not a marketplace. This means you are responsible for collecting and remitting sales tax in every state where you have nexus — which includes any state where your sales exceed the economic nexus threshold. At $100,000 in sales or 200 transactions per year in most states, sellers with meaningful website traffic can quickly create nexus in multiple states without realizing it.

3. Selling on channels that are not marketplace facilitators

Not every selling platform qualifies as a marketplace facilitator for all transaction types. If you sell through channels where the platform does not handle sales tax collection on your behalf, you retain full responsibility. Always verify whether a specific platform handles sales tax in the states relevant to your sales volume before assuming it does.

4. B2B sales and tax-exempt transactions

If you sell to other businesses that claim tax exemption — retailers, resellers, non-profit organisations — those buyers will present you with their own exemption certificates. To process these transactions correctly and avoid liability, you need your own registration in the relevant states. Accepting an exemption certificate without proper registration on your end creates compliance risk.

Key State Economic Nexus Thresholds

If you sell through your own website or non-facilitator channels, economic nexus thresholds determine when you are required to register in each state. The following table covers the most significant states for e-commerce sellers — those with large populations, high consumer spending, or specific rules worth knowing.

The five states with no sales tax are Oregon, Montana, New Hampshire, Delaware and Alaska (Alaska has no statewide tax but some local jurisdictions may apply their own). If your customers are primarily in these states, your sales tax exposure for non-marketplace channels is zero for those transactions.

How to Register for a State Sales Tax Permit

Each US state manages its own sales tax registration through its Department of Revenue or equivalent agency. The process varies by state but follows a broadly similar pattern. Here is what to expect.

1. Determine which states you need to register in. For wholesale buying, register in the state where your supplier is located. For own-website sales, register in every state where your sales exceed the economic nexus threshold. For FBA inventory nexus, assess whether Amazon's marketplace facilitator coverage addresses your specific situation or whether additional registration is needed.
2. Gather your business documentation. You will need your business entity details (LLC or corporation name, formation state, EIN), your business address, a description of your primary business activity, and the date your nexus was established in the state.
3. Complete the online registration. Most states offer online registration through their Department of Revenue website. The process typically takes 20 to 45 minutes per state and is free in most states, though a small number charge a nominal registration fee.
4. Receive your sales tax permit number. Processing time varies from instant in some states to two to four weeks in others. This permit number is what you use to create your resale certificates for wholesale suppliers.
5. Set up your filing schedule. Once registered, states assign you a filing frequency — monthly, quarterly or annually — based on your expected sales volume. You must file returns on time even in periods when you owe zero tax.

How the Resale Certificate Works in Practice

Once you have a sales tax permit in a state, you can use a resale certificate to purchase goods from suppliers in that state without paying sales tax. The mechanics are straightforward but the documentation requirements matter.

Most states use the Streamlined Sales Tax (SST) Certificate of Exemption or their own state-specific form. When you contact a new supplier, they will ask you to complete and sign a resale certificate before activating your account as a tax-exempt buyer. The certificate includes:

• Your business name and address
• Your state sales tax permit number
• The state of registration
• A description of the goods you are purchasing for resale
• Your signature certifying the goods will be resold and not consumed by your business

Understanding Back-Tax Liability and Voluntary Disclosure

One of the most common concerns sellers raise when they discover they should have been registered in a state is: what happens to the tax they should have collected but did not? This is called back-tax liability, and it can be significant for sellers who have been operating without registration for an extended period.

The good news is that most states offer a Voluntary Disclosure Agreement (VDA) program that allows sellers to come forward proactively, disclose their unregistered period, and settle the outstanding liability — often with penalties waived and lookback periods limited. The conditions of VDA programs vary by state but generally:

• The lookback period is typically limited to three or four years rather than the full period of non-compliance
• Penalties are often reduced or waived entirely for first-time disclosures made in good faith
• Interest on unpaid tax is generally still owed but at the standard rate rather than penalty rates
• The state agrees not to audit periods before the VDA lookback window

For sellers with significant back-tax exposure, VDA is almost always the right approach compared to waiting to be discovered through an audit. States are increasingly data-sharing with the IRS and with platforms like Amazon to identify unregistered sellers with taxable activity.

Sales Tax Software: Automating Compliance

For sellers with nexus in multiple states and significant sales volumes, manual sales tax filing is impractical. Two platforms dominate the market for e-commerce sales tax automation.

TaxJar

TaxJar connects directly to Amazon Seller Central and automatically imports your sales data. It calculates the tax collected in each state, generates ready-to-file returns for each state, and offers AutoFile functionality that submits and pays your returns automatically on your behalf. For most Amazon FBA sellers who also sell through their own website, TaxJar provides a clear and well-supported solution. Pricing starts at around $19 per month and scales with transaction volume.

Avalara

Avalara is an enterprise-grade tax automation platform used by larger sellers and businesses. It integrates with virtually every e-commerce platform and ERP system, handles more complex tax scenarios including international VAT, and provides dedicated compliance support. Pricing is higher than TaxJar and typically suited to sellers with $1M+ in annual revenue or complex multi-channel situations.

A Note for International Sellers

If you are based outside the United States and selling on Amazon through FBA, your sales tax situation is exactly the same as a US-based seller in terms of marketplace facilitator coverage. Amazon handles retail marketplace tax in all 50 states regardless of where you are located.

However, international sellers who buy from US wholesale suppliers — brands, distributors or trade shows — need a US sales tax permit to obtain resale certificates for those purchases. Without a US business entity (LLC or C-Corp) and a sales tax permit, US suppliers cannot process you as a tax-exempt reseller and will charge you sales tax on every wholesale order.

The typical path for international sellers who want to buy wholesale in the US is to form a US LLC, obtain an EIN, register for a sales tax permit in their primary sourcing state, and then use their resale certificate with suppliers. We handle this entire process for our international clients as a complete package.

The sellers who run into serious sales tax problems are almost never the ones who tried to understand the rules and got something slightly wrong. They are the ones who assumed the question did not apply to them and never asked at all. A 30-minute consultation costs nothing and can prevent a multi-year back-tax liability that runs to tens of thousands of dollars.