U.S. sales tax: when international sellers should review their exposure
Selling into the U.S. can create sales tax obligations well before you have a physical presence there — here's when to check.
Many international businesses assume that sales tax obligations in the United States only arise once they have a physical presence there — an office, warehouse or employees. That assumption is outdated. Most U.S. states now impose sales tax collection obligations based on the level of sales activity in the state, regardless of physical presence.
Because sales tax is administered at the state level, exposure has to be assessed state by state, not as a single national question. A business can cross a registration threshold in one state well before it does in another, depending on where its customers are located and how much it sells there.
The type of product or service sold also matters. Taxability rules differ from state to state, and what is taxable in one state may be exempt in another. This is particularly relevant for digital products and services, where treatment varies more than it does for physical goods.
A practical starting point is a review of where your sales are concentrated and how that activity compares to each state's registration thresholds. This helps identify where registration may already be required, and where it is likely to become necessary as sales grow.
This article outlines general considerations only and does not constitute tax advice for a specific situation. EXCOFIM can help assess sales and use tax exposure and coordinate registration and compliance with qualified local professionals.