Do international sellers have to deal with sales tax in the US?
Since numerous e-commerce sellers operate internationally, we’ll examine the different scenarios they encounter and explore when and how international sellers must address US sales tax. This article focuses solely on sales tax, excluding discussions on customs duties, import taxes, and other potential taxes international sellers may encounter when conducting business in the United States.
You are an international seller, with no physical presence or sales into the United States
Congratulations! If you do not have a physical presence in the US or make sales into the US, you are not obligated to collect US sales tax.
You are an international seller who has no physical presence in the US, but who makes sales into the US.
In this situation, you can trigger economic nexus. Under a June 21, 2018 Supreme Court decision, states can require online sellers with “economic nexus” in their jurisdiction to comply with their sales tax rules.
Essentially, this means that if a seller, regardless of location, reaches a certain sales revenue or transaction threshold within a state, they must collect sales tax there. For example, in Kentucky, any seller (whether U.S.-based or international) that exceeds $100,000 in sales or 200 transactions in the state in the current or previous calendar year must comply with Kentucky’s sales tax requirements. This includes obtaining a Kentucky sales tax permit and collecting sales tax from Kentucky purchasers.
Approximately half of all U.S. states currently enforce economic nexus laws. For more details on economic nexus laws in each state, click here.
You are an international seller, who warehouses items in the US, such as in an FBA warehouse
If you reside outside the United States but sell through FBA or establish any other form of sales tax nexus in the US (such as having employees, an office, a satellite branch, or storing inventory in a warehouse), you need to to comply with the sales tax laws of the states where you have nexus.
You are a non-US Citizen, but you live in and have “nexus” in the United States
Similarly to the example above, compliance with state sales tax laws is mandatory regardless of your legal status. We’ve engaged with customers residing in the US whose citizenship status is “non-resident alien.” This legal distinction, however, should not be conflated with “nexus.”
Even if your customers are not U.S. citizens, operating a business and storing inventory within a U.S. state creates a sales tax nexus in that state. This requires you to collect and remit sales tax in the state(s) where your business activities are established.
Do you have any other questions?
To summarize, international sellers may or may not have to deal with US sales tax depending on their specific circumstances:
- No physical presence or sales in the US: No obligation to collect US sales tax.
- Sales into the US but no physical presence: Economic nexus may apply. Sellers exceeding sales revenue or transaction thresholds in certain states must comply with sales tax requirements.
- Warehousing inventory or other nexus in the US: Obligated to follow sales tax laws in states where nexus exists.
- Non-US citizens living in the US with nexus: Required to collect and remit sales tax where their business activities create nexus, regardless of citizenship status.
For further insights, explore the Startxpress Help Center and Blog. If you have questions or need support, reach out anytime at support@startxpress.io!
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