Non-Resident Business Sales Tax & Nexus Rules in the US

Non-Resident Business A business that operates or sells in a country without being resident there for tax or legal purposes. In the United States, non-resident sellers must consider federal rules, state-by-state sales tax nexus, and marketplace facilitator laws when they accept orders from U.S. customers.

The 2018 Supreme Court ruling in South Dakota v. Wayfair replaced the physical-presence standard for sales tax nexus with the recognition that substantial virtual or economic activity can create a state tax obligation. For non-resident eCommerce sellers this means that merely making sales into a state — or having inventory there through a fulfillment provider — can require registration, collection, and remittance of state sales tax.

Types Of Sales-Tax Triggers

States vary. The most common nexus triggers are economic thresholds (sales dollars or transaction counts), physical presence (inventory, employees, or property), and marketplace facilitation rules (where platforms must collect tax on behalf of third-party sellers). Non-resident businesses should verify each state’s rules because thresholds, definitions, and exemptions differ.

Marketplace Facilitator Rules

Many states require marketplaces to collect and remit sales tax when marketplace-facilitated sales occur. If you sell via an enrolled marketplace, the platform may handle collection for you; if you sell direct, the responsibility often falls to your business. However, obligations like registration, recordkeeping, and providing tax information to customers can still rest with the seller in some states.

How Inventory Changes Nexus

Storing goods in a U.S. warehouse (including a 3PL or marketplace fulfillment center) typically creates a physical presence nexus for the states where the goods sit. That presence generally requires the non-resident to register for sales tax in those states and to collect tax on taxable sales shipped from those warehouses.

Practical Steps For Sales-Tax Compliance

• Map your footprint: Identify every state where you have customers, inventory, or third-party services that could create nexus.
• Check thresholds: Review each state’s economic nexus thresholds (commonly $100,000 in sales or 200 transactions, but this varies).
• Use marketplace services: Where possible, sell through marketplaces that collect tax; confirm whether they will provide seller reports and tax documentation.
• Register where required: Complete vendor registration and obtain state tax IDs before making taxable sales.
• Automate collection: Integrate tax software or a tax engine to calculate and collect the correct rate at checkout.

Withholding And Income Tax Considerations

Sales tax is separate from income tax. Non-resident businesses may also face U.S. federal or state income tax if they are deemed to be engaged in a U.S. trade or business or if they have effectively connected income. Additionally, payments to foreign entities may be subject to U.S. withholding under certain circumstances. Consult a tax advisor to separate sales-and-use obligations from income tax exposure.

Examples

A Canadian toy maker sells via its direct website into multiple U.S. states. After exceeding the $100,000 threshold in two states, it registers for sales tax collection in those states. Separately, the company uses a U.S.-based 3PL in California; inventory stored there creates nexus in California and possibly in other states if the 3PL moves inventory between facilities.

Common Pitfalls

• Assuming marketplaces always handle taxes: Marketplace treatment varies and you must confirm the platform’s responsibility and the level of reporting provided to you.
• Overlooking small states: Some low-volume states or local jurisdictions have different thresholds; don’t ignore them.
• Poor recordkeeping: Missing invoices, shipping records, or exemption certificates create audit risk and penalties.

In short, the Non-Resident Business selling into the United States must treat state sales tax and nexus as a primary compliance area: map where you sell and store goods, confirm marketplace responsibilities, and register and collect tax where the law requires.