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Book your demoSales tax questions businesses asked at our 2026 office hours
During our recent sales tax office hours, businesses submitted 52 questions about nexus, registration, marketplaces, filing, and automation. We consolidated the recurring themes into 14 practical questions below.
These answers provide general educational information. Your obligations may vary by state and business circumstances, so consult a qualified sales tax advisor or the appropriate tax authority when you need guidance for a specific situation.
Want to see how TaxJar can help you monitor nexus, organize multichannel sales data, and automate eligible filings? Schedule time with our team or start a 30-day free trial.
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1. What creates nexus, and which sales count toward economic nexus thresholds?
2. If Amazon or another marketplace collects tax, what am I still responsible for?
3. How can I manage sales tax across multiple states and sales channels?
5. How do I handle sales tax for orders shipping to multiple locations?
6. How do drop shipping and resale certificates work?
7. Are credit card surcharges subject to sales tax?
8. Are consulting services always exempt from sales tax?
9. How should software and SaaS businesses prepare for California’s 2027 tax change?
10. How do refunds affect sales tax and economic nexus thresholds?
12. Which states do not require sales tax registration or filings, if any?
13. How does US sales tax differ for international sellers?
14. When does it make sense to pay for sales tax software?
1. What creates nexus, and which sales count toward economic nexus thresholds?
Nexus is a connection with a state that creates a sales tax obligation. Economic nexus is based on transaction count or revenue amounts, but physical presence and certain business relationships can also create sales tax obligations. This is called physical nexus.
Common triggers include storing inventory in an Amazon warehouse, working with in-state affiliates or referral partners, and sending employees or representatives into a state to deliver, install, assemble, or service products. The important thing to remember is that you can reach physical nexus in a state without being close to its economic nexus threshold. What creates nexus varies by state, and we outline each state’s guidance in this blog post.
There is no single nationwide definition of sales for economic nexus. One state may use gross revenue, including taxable and nontaxable sales. Another may count only retail or taxable sales. States can also differ on wholesale transactions, exempt products, services, marketplace sales, and whether they use a revenue threshold, transaction count, or both.
The measurement period also differs. Start with the state revenue department’s current economic nexus guidance to confirm which sales count, the threshold, and the measurement period. Sign up for a free TaxJar trial, connect your sales channels, and use TaxJar’s Economic Nexus Insights to see where your business may be approaching or may have reached a state threshold.
Only collect sales tax in states where you have met a nexus requirement. Collecting sales tax without remitting it to the tax authorities is unlawful, so monitor your exposure and begin collecting only after you have an obligation and the required registration.
2. If Amazon or another marketplace collects tax, what am I still responsible for?
In most scenarios, a qualifying marketplace, such as Amazon, Etsy, eBay, or Walmart, collects and remits sales tax on the transactions it facilitates. The seller normally should not collect that same tax a second time. Marketplace facilitator laws vary by state.
Marketplace collection doesn’t erase every seller obligation. You may still need to collect on sales through your own website, marketplace sales may count toward a state’s economic nexus threshold, and some states may require you to maintain a registration and report marketplace sales on a zero return.
3. How can I manage sales tax across multiple states and sales channels?
Start by listing every state where you have sales tax nexus and confirming you’re registered in those states. Then configure tax collection in each sales channel, using consistent product classifications and customer exemption information.
Bring orders, marketplace sales, and refunds from every channel into one reporting workflow. Before each filing, reconcile that data against your source systems and confirm which marketplace taxes were collected on your behalf.
This is where a solution like TaxJar helps. TaxJar compiles data from your sales channels into a single reporting dashboard and generates state-specific reports with jurisdictional breakdowns. You can then see your compliance picture, set up eligible automatic filing and remittance, and manage multistate sales tax more easily.
4. When should I register for a sales tax permit, and what if I should have registered or filed earlier but haven’t?
After you determine that you have nexus and sell taxable products or services, register with the appropriate tax authority before collecting tax. Registration generally requires owner and business information, tax IDs, entity details, sales estimates, locations, sales channels, and banking information. TaxJar can also manage the registration process for you. The state will assign a filing frequency, and that frequency can differ by state.
If you’ve realized you met a nexus threshold a while ago and should have already registered, gather your sales history, inventory locations, exemption records, marketplace transactions, and state notices. A qualified sales tax advisor can help determine when the obligation began and estimate tax, interest, and penalties. Talk with an advisor before approaching the state; a voluntary disclosure agreement may offer a limited lookback period or penalty relief, but eligibility varies. Learn how voluntary disclosure agreements work.
5. How do I handle sales tax for orders shipping to multiple locations?
Treat each shipment separately. Keep the items, prices, shipping charges, and delivery address associated with each destination, then apply the relevant sourcing and taxability rules for that address. Don’t calculate tax for the entire order using the billing address or first shipping address, since rates can vary by state and local jurisdiction.
6. How do drop shipping and resale certificates work?
A typical drop shipment involves two sales: the supplier’s sale to the retailer and the retailer’s sale to the customer. A valid resale certificate may make the supplier’s sale exempt, while the retailer’s collection obligation depends on nexus, product taxability, and the destination state. Review drop-shipping scenarios on the TaxJar blog.
A resale certificate allows registered retailers to buy items for resale without paying sales tax on those items. Some states issue certificates tailored to your business; others provide a template to complete with your resale certificate number. Either way, you’ll need to give the supplier the documentation the state requires. Here’s how to get a resale certificate in each state.
7. Are credit card surcharges subject to sales tax?
In most states, when the underlying product or service is taxable, a credit card surcharge, processing fee, or transaction fee is also taxable because it is included in the total sales price. For example, tax on a taxable item with a 2% card surcharge is generally calculated on the combined amount.
8. Are consulting services always exempt from sales tax?
No. Service taxability depends on the state and what you provide. Pure advice may be treated differently from consulting bundled with software, installation, training, reports, or other deliverables. Document the service, deliverables, billing method, and where the customer receives it, then evaluate taxability and nexus separately. Read when businesses should charge tax on services.
If you need to charge sales tax on services, TaxJar takes all of these nuances into account and simplifies the process. Our AI-powered product classification tool evaluates your products and suggests the right tax code for each one so you can stop guessing which items are taxable.
9. How should software and SaaS businesses prepare for California’s 2027 tax change?
Beginning January 1, 2027, California’s expanded rules generally apply to qualifying digital products delivered physically, electronically, or through remote access. This is a big shift, as California previously did not consider these items taxable. Review your products, bundles, exclusions, nexus, registration, billing, customer-location data, and contracts before changing collection.
Services driven primarily by human effort may be treated differently from access to prewritten cloud-hosted software; remote delivery alone doesn’t determine taxability. Review your products and bundled services, document exclusions or exemptions, confirm whether you have a California registration and collection obligation, and follow current CDTFA guidance. Don’t assume every SaaS offering has the same treatment.
10. How do refunds affect sales tax and economic nexus thresholds?
When you refund sales tax to a customer for a previous taxable period, states may require you to amend that period’s return. You may then claim the refunded tax as a credit, subject to the state’s rules.
A refund generally does not create a new transaction for economic nexus purposes, but the original order may not disappear from the threshold calculation. We outline common scenarios in this blog post.
11. If I don’t collect any sales tax in a period, do I have to remain registered and file zero returns?
If your business has an active sales tax permit, continue filing on the state-assigned schedule until the state confirms that the registration is closed—even if you didn’t collect tax during the period. Not collecting tax doesn’t automatically cancel the permit or filing obligation, and a missed zero return can lead to notices or penalties.
If you think you no longer have an obligation, don’t simply stop filing. Check for remaining physical, affiliate, inventory, direct-sales, or marketplace-related obligations, then follow the state’s process, which may require a final return, a cancellation request, or both.
12. Which states do not require sales tax registration or filings, if any?
Five states do not have a general statewide sales tax:
- Alaska: Local jurisdictions may require ecommerce businesses with economic nexus to collect sales tax. See the participating Alaska jurisdictions.
- Delaware
- Montana
- New Hampshire
- Oregon
Local or special taxes may still apply. For example, local areas in Montana levy a sales tax on tourism-related transactions. Always check the relevant tax authority’s current rules when your business has activity or nexus in a state.
13. How does US sales tax differ for international sellers?
It depends on how you make sales in the US, inventory, physical activity, or economic nexus can create state sales tax obligations even when the seller is based abroad. We outline common scenarios for international sellers in this blog post.
14. When does it make sense to pay for sales tax software?
It’s less about reaching one revenue number and more about when the cost and risk of manual compliance begin to outweigh the software cost.
Common signs include selling through multiple channels, approaching nexus thresholds in several states, processing enough transactions that rate and product-taxability research takes significant time, or spending too many hours pulling reports and preparing returns. Software may also make sense earlier if the business is growing quickly and wants clean transaction data before its obligations expand.
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TaxJar can bring sales data from multiple channels into one reporting workflow, help monitor economic nexus exposure, provide sales tax calculations, and automate eligible returns and remittances through AutoFile.
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