Most foreigners who do online business in the USA (US LLC company owners) are now very familiar with the term NEXUS (sales tax nexus). If you are not familiar with it, we recommend that you first take a look at the Taxation in America
In this article, we will share state-by-state transaction and turnover limits, state tax rates, and what happens if foreign sellers exceed these limits for LLC owners doing business as foreigners in the USA.
First of all, it is necessary to give a brief summary based on the importance of this Nexus incident. Because we can say that it is a phenomenon that seems very complex and misunderstood.
If you have an LLC company in the USA, but do not have any branches, subsidiaries, physical offices, or officially insured employees in the USA on paper, it means you have no ties to that state. Until June 2018, foreign LLC owners had no obligation to collect or declare any taxes because they had no state-level ties.
However, the Supreme Court in South Dakota v. the Wayfair case, foreigners who no longer have physical ties are now considered economically dependent on the states.
As a result of this decision, every foreign LLC owner is required to collect and report sales tax if they exceed state transaction limits for e-commerce. This should not be confused with constantly paying income tax in the USA. If your sales to states exceed that state's transaction limit and turnover limit, you must collect and declare taxes, otherwise there is no problem.
the Wayfair decision , even if you do not have a physical presence in any US state, you are legally obligated to file taxes if you exceed the state's total turnover or number of transactions limit.
The situation has actually changed with this court decision. In other words, before this decision, foreign LLC owners could do e-commerce and sell their products in every state of the USA. During these sales, they did not collect sales tax and did not remit it to the states. As a result of this case, the decision was considered a precedent and changes were made regarding sales limits in all states.
Marketplaces like Amazon collect sales tax themselves in almost all states in the US. If you are an Amazon marketplace seller, you do not need to collect sales tax in states that Amazon supports. Amazon collects this tax itself, declares it and returns it.
Sales Tax Rates by State
Each state's sales tax rate is different and even varies by city in some states. It is impossible to obtain such a large amount of data from here and keep it up to date. So let us introduce you to the Taxjar tax tool. You can find the tax rate by clicking on the state on the map or by city from this tool and this calculator
Limits and Transaction Thresholds by State
Important information to note: This area of law can change over time across states. Additionally, not all states are included in this list because some states have not yet announced their own laws, so it is difficult to obtain clear information about them. If you are going to sell products to a state that is not on the list, you can do research on that state. This information is usually included in the tax sections of state websites.
We try to keep this article up to date and recommend that you use this page as a guide only. If you have specific questions, we recommend consulting a sales tax professional .
Here is our famous painting. Good luck to everyone.
| State | Turnover Threshold (Annual) | Number of Transactions Limit (Annual) | Explanation |
| Alabama | 250.000 $ | None | Sellers who exceed the $250,000 sales threshold must register with the state and declare that amount |
| Alaska | 100.000 $ | 200 | Sellers who exceed the $100,000 sales threshold of $100,000 and 200 transactions must register with the state and declare that amount |
| Arizona | 100.000 $ | None | Sellers who exceed the $100,000 sales threshold must register with the state and declare that amount |
| Arkansas | 100.000 $ | 200 | Sellers who exceed the $100,000 sales threshold of $100,000 and 200 transactions must register with the state and declare that amount |
| california | 5000.000 $ | None | Sellers who exceed the $500,000 sales threshold must register with the state and declare that amount |
| Colorado | 100.000 $ | None | Sellers who exceed the $100,000 sales threshold must register with the state and declare that amount |
| Connecticut | 100.000 $ | 200 | Sellers who exceed the $200,000 sales threshold of 200 transactions must register with the state and declare that amount |
| Delaware | No Sales Tax | No Limit | You don't need to collect sales tax when you sell to people in the state of Delaware, and there are no transaction (checkout) limits. |
| Florida | 100.000 $ | None | Sellers who exceed the $100,000 sales threshold must register with the state and declare that amount |
| Georgia | 100.000 $ | 200 | Sellers who exceed the $100,000 sales threshold of $100,000 and 200 transactions must register with the state and declare that amount |
| Hawaii | 100.000 $ | 200 | Sellers who exceed the $100,000 sales threshold of $100,000 and 200 transactions must register with the state and declare that amount |
| Idaho | 100.000 $ | None | Sellers who exceed the $100,000 sales threshold must register with the state and declare that amount |
| illinois | 100.000 $ | 200 | Sellers who exceed the $100,000 sales threshold of $100,000 and 200 transactions must register with the state and declare that amount |
| indiana | 100.000 $ | 200 | Sellers who exceed the $100,000 sales threshold of $100,000 and 200 transactions must register with the state and declare that amount |
| Iowa | 100.000 $ | None | Sellers who exceed the $100,000 sales threshold must register with the state and declare that amount |
| Kansas | 100.000 $ | None | Sellers who exceed the $100,000 sales threshold must register with the state and declare that amount |
| Kentucky | 100.000 $ | 200 | Sellers who exceed the $100,000 sales threshold of $100,000 and 200 transactions must register with the state and declare that amount |
| Louisiana | 100.000 $ | 200 | Sellers who exceed the $100,000 sales threshold of $100,000 and 200 transactions must register with the state and declare that amount |
| Maine | 100.000 $ | None | Sellers who exceed the $100,000 sales threshold must register with the state and declare that amount |
| maryland | 100.000 $ | 200 | Sellers who exceed the $100,000 sales threshold of $100,000 and 200 transactions must register with the state and declare that amount |
| massachusetts | 100.000 $ | None | Sellers who exceed the $100,000 sales threshold must register with the state and declare that amount |
| Michigan | 100.000 $ | 200 | Sellers who exceed the $100,000 sales threshold of $100,000 and 200 transactions must register with the state and declare that amount |
| Minnesota | 100.000 $ | 200 | Sellers who exceed the $100,000 sales threshold of $100,000 and 200 transactions must register with the state and declare that amount |
| Missouri | 100.000 $ | None | Sellers who exceed the $100,000 sales threshold must register with the state and declare that amount |
| Montana | No Sales Tax | No Limit | You don't have to collect sales tax when you sell to people in the state of Montana, and there are no transaction (checkout) limits. |
| mississippi | 250.000 $ | None | Sellers who exceed the $250,000 sales threshold must register with the state and declare that amount |
| Nebraska | 100.000 $ | 200 | Sellers who exceed the $100,000 sales threshold of $100,000 and 200 transactions must register with the state and declare that amount |
| Nevada | 100.000 $ | 200 | Sellers who exceed the $100,000 sales threshold of $100,000 and 200 transactions must register with the state and declare that amount |
| new hampshire | No Sales Tax | No Limit | When you sell to people in the state of New Hampshire, you do not need to collect sales tax and there are no transaction (checkout) limits. |
| New Jersey | 100.000 $ | 200 | Sellers who exceed the $100,000 sales threshold of $100,000 and 200 transactions must register with the state and declare that amount |
| New Mexico | 100.000 $ | None | Sellers who exceed the $100,000 sales threshold must register with the state and declare that amount |
| new York | 500.000 $ | 100 | Sellers who exceed the $500,000 sales threshold of $500,000 and 100 transactions must register with the state and declare that amount |
| north carolina | 100.000 $ | 200 | Sellers who exceed the $100,000 sales threshold of $100,000 and 200 transactions must register with the state and declare that amount |
| north dakota | 100.000 $ | None | Sellers who exceed the $100,000 sales threshold must register with the state and declare that amount |
| Ohio | 100.000 $ | 200 | Sellers who exceed the $100,000 sales threshold of $100,000 and 200 transactions must register with the state and declare that amount |
| Oklahoma | 100.000 $ | None | Sellers who exceed the $100,000 sales threshold must register with the state and declare that amount |
| Oregon | No Sales Tax | No Limit | You don't have to collect sales tax when you sell to people in the state of Oregon, and there are no transaction (checkout) limits. |
| Pennsylvania | 100.000 $ | None | Sellers who exceed the $100,000 sales threshold must register with the state and declare that amount |
| Rhode Island | 100.000 $ | 200 | Sellers who exceed the $100,000 sales threshold of $100,000 and 200 transactions must register with the state and declare that amount |
| south carolina | 100.000 $ | None | Sellers who exceed the $100,000 sales threshold must register with the state and declare that amount |
| south dakota | 100.000 $ | 200 | Sellers who exceed the $100,000 sales threshold of $100,000 and 200 transactions must register with the state and declare that amount |
| Tennessee | 100.000 $ | None | Sellers who exceed the $100,000 sales threshold must register with the state and declare that amount |
| Texas | 500.000 $ | None | Sellers who exceed the $500,000 sales threshold must register with the state and declare that amount. |
| Utah | 100.000 $ | 200 | Sellers who exceed the $100,000 sales threshold of $100,000 and 200 transactions must register with the state and declare that amount |
| Vermont | 100.000 $ | 200 | Sellers who exceed the $100,000 sales threshold of $100,000 and 200 transactions must register with the state and declare that amount |
| virginia | 100.000 $ | 200 | Sellers who exceed the $100,000 sales threshold of $100,000 and 200 transactions must register with the state and declare that amount |
| washington | 100.000 $ | None | Sellers who exceed the $100,000 sales threshold must register with the state and declare that amount |
| Washington D.C. | 100.000 $ | 200 | Sellers who exceed the $100,000 sales threshold of $100,000 and 200 transactions must register with the state and declare that amount |
| WestVirginia | 100.000 $ | 200 | Sellers who exceed the $100,000 sales threshold of $100,000 and 200 transactions must register with the state and declare that amount |
| Wisconsin | 100.000 $ | None | Sellers who exceed the $100,000 sales threshold must register with the state and declare that amount |
| wyoming | 100.000 $ | 200 | Sellers who exceed the $100,000 sales threshold of $100,000 and 200 transactions must register with the state and declare that amount |
We hope that this article will enlighten foreign traders who will sell in the USA.
You can read this article at https://blog.taxjar.com/economic-nexus-laws/ and https://www.avalara.com/us/en/learn/guides/state-by-state-guide-economic-nexus-laws We tried to quote and translate from .html sites.
This site also includes relevant resource links of the tax units of the states. We checked most of them, but it is the same as the data on state websites, but it is useful to check it from time to time.
Let's list what we can deduce from this table;
- States in the uncolored portions of the table have no sales tax or limit. In other words, you can sell as much as you want to people in these states, it does not create nexus and you will not have a tax situation.
- Some states have a maximum transaction limit of 200 per year. So a maximum of 200 units can be sold. When this number is exceeded, you need to collect sales tax and also pay income tax since you will have an economic connection with the USA.
- Some states have a maximum transaction limit of 100 per year. In other words, a maximum of 100 units can be sold (checkout) to residents in these states. When this number is exceeded, you need to collect sales tax and also pay income tax since you will have an economic connection with the USA.
- In some states, there is no annual sales transaction (number of sales) limit. The turnover should not exceed 100,000, 200,000 or 500,000 US dollars. When these turnovers are exceeded, you need to collect sales tax and also pay income tax since you will have an economic connection with the USA.
- In a few states the limits are quite high
Collecting sales tax has nothing to do with the state where your company is incorporated;
What is important is which state the income is generated from.
Ex; There is no sales tax in Delaware and if your company is formed in Delaware and you sell to people in the state of Mississippi and exceed the limit, an economic connection is created.
You collect sales tax from people in the state of Mississippi and pay it back.
Even if you have a company in Delaware, there is no sales tax there, so it is not possible not to collect
In this scenario, if you were generating income from people living in Delaware, then you would not pay sales tax because there is no sales tax in that state.
We can say that this article is a good resource for foreign traders, e-commerce experts, and dropshipping experts who have economic ties in the USA and will sell to US citizens.
If you have different opinions, feel free to comment.
38 Comments . New Comment
Hello. I formed an LLC company in the state of Wyoming in August 2022, but so far there has been no transaction, no invoice has been issued, it remains as it was opened. Do I still need to file a tax return? Thank you.
If you have opened a bank account and recorded your EIN number somewhere, you must fill out form 5472 with at least O USD income and expenses.
Hello,
I develop a mobile application and receive payment from Apple. Apple normally makes payments to non-American companies through Ireland, but it will probably make payments to American companies from America. What kind of taxation may I encounter in this case? I will move to Dubai soon, but I do not want a company there because of the ESR application rather than tax.
The company will have not only app revenue but also expenses for advertising and Saas used. For example, if there will be $1 million in revenue during the year, there will be around $600k in advertising expenses. In this case, what about state and federal taxes and other taxation, if any?
Your expenses can be deducted from taxes at the end of the year, of course, the expenses spent for your company are tax deductible, you must be able to document them. You pay federal taxes on your net income after expenses, but no state taxes. If you explain the issue to your consultant at the end of the year (with expense receipts), he will make your tax declaration in the appropriate class for you.
Hello,
I established my company in wayoming and applied for a reseller certificate to buy goods from wholesalers. I think it is necessary to get a reseller certificate from the place where the intermediate warehouse is located. I am thinking of closing the one in woyaming and applying from the place where the intermediate warehouse is located. What is your comment on this issue?
Secondly, my most important question is that I want to buy goods from wholesalers and sell on Amazon Canada with the company I established in America. How should I proceed here? Should I give this information to the wholesalers so that they do not deduct VAT? Otherwise, I think I have to pay back the VAT since I do not sell it in America. Could you please comment on this incident and the tax declaration of money entering Mercury when selling products in Canada, thank you very much in advance.
Hello, we recommend that you consult an Amazon expert or a tax expert on these issues.
If you are going to sell to Canada, it is probably worth discussing this with the wholesaler, because if the products will not be sold into the USA, this means that VAT will not be collected and will not be refunded.
Should we start not declaring when we exceed the transaction threshold in states, or can we just not pay because we haven't exceeded the $ equivalent amount?
My company is based in Wyoming. Do I need to collect and file taxes on sales in Wyoming without a transaction limit?
If you exceed the transaction threshold in any state, you must collect sales tax from your customers, register on that state's website, and then repay the taxes you collected to the state. This has nothing to do with which state the company is formed in.
When you exceed the transaction threshold on sales in Wyoming, you must collect sales tax and return it periodically by registering it with the state.
If you use Stripe, there are apps that calculate this automatically, and there are also bookkeeping software such as Quickbooks.
Thank you for your answer, sir. I am sales tax registered in the state of Georgia. I sold a few yachts in April. Do I have to declare this next month?
Also, are these sales amounts and quantities renewed every year?
Hello, you can find the duration of this on the state website. Rates may change periodically, of course, it is useful to check them from time to time.
Actually, I wanted to ask this
. For example, for a state with a 100 transaction limit, do we start making declarations after completing 90 transactions this year and 10 transactions the next year, or will the 100 transaction limit be renewed the next year?
It is renewed every year. Limits are processed annually.
Hello, I have a Wyoming LLC. It was established in November 2022. I did dropshipping on Amazon Australia. I made a turnover of AUD 45000. It costs 30000 USD. Around 120 transactions.
1) Will I pay taxes? I think it is given if it is over 20000 USD or over 200 transactions.
2) Doesn't the tax liability come out at the end of 1 year after the company is established? That is, as of January 2024.
3)How is the tax amount calculated?
Hello,
You may receive a 1099 K. You may need to file a tax return by April. They calculate your rates and tell you how much tax you'll pay minus expenses.
You can talk to Turkotaxacc and make an appointment.
https://turkotaxacc-1.hubspotpagebuilder.com/startupsole
Hello,
Thank you very much for the information.
Let's say I own an LLC in Wyoming and I do e-commerce (Dropshipping) with Shopify and I send my products to all states in the USA from the warehouse in China.
For example, the turnover threshold in Mississippi is 250,000 dollars and there is no limit on the number of transactions. So, will I not collect sales tax from customers until I reach a turnover of 250,000 dollars in this state? Or should sales tax start being collected from the first moment I make a sale? Thank you in advance.
Hello,
You do not need to collect sales tax at the beginning, but when you look at the sales potential, if it looks like it will go that way (for example, you are going to exceed 250 k USD), you need to start collecting sales tax within this period.
Anyway, if you use stripe, it will send you an information e-mail in this direction.
We kindly request you and wish you luck.
Hello,
you mentioned the limits in the states.
Are these limits also valid for an LLC that does not make any sales in the USA and all its customers are from Turkey?
Do payments received from Turkey only via Stripe trigger a 1099-K and require us to file a 1040NR?
If I can know this for sure, I will only focus on Turkish customers until the CPA fee is removed. Then I will head to the USA.
Also, should the ITIN number be obtained only if 1099-K is received? Is it beneficial to get an ITIN beforehand?
Thanks
The limits apply to income derived from the United States. There does not appear to be any limit on stripe documents for Türkiye, so there is no clear information about the threshold at which they will send 1099k. This may not mean unlimited turnover; they will definitely send notifications after a certain level. After that notification, you need to fill out 1040NR at the end of the year. If you do not receive a notification, there is no need to fill it out anyway.
While filling out form 5472 at the end of the year, CPAs ask you whether you have received 1099K from anywhere, and if you have received it, they tell you that you should act accordingly and fill out 1040NR instead of 5472.
There is no harm in getting ITIN before, on the contrary, paypal etc. It strengthens your hand when opening accounts on platforms such as.
Now, LLCs that sell on Amazon do not have the obligation to collect sales tax and report it to the IRS. Amazon does this itself, ok. So, is there a threshold for Amazon here? So let me ask you this: When
person
If you are doing Amazon business through LLC, after a certain level (when the threshold is exceeded) Amazon will already send you a form called 1099K. Yes, it collects sales tax itself, but this does not mean that the company owner has no responsibility.
Receiving the form means that you have an economic connection in the USA. At this stage, you inevitably need to declare the income generated by your company and pay taxes.
Because when you receive this form (also valid for Amazon, Stripe, Ebay), the platforms automatically report you to the US Internal Revenue Service. Receiving the form and doing nothing may constitute a tax crime, so when such a notification comes, it is necessary to get support from a CPA and declare your income.
If you are doing Amazon business through LLC, after a certain level (when the threshold is exceeded)
Well, sir, is the threshold you are talking about here the state thresholds you mentioned in the article, or is it a threshold based on my turnover or sales through Amazon?
The article was not written for Amazon and there are multiple details, do not get confused.
The thresholds in the article are state limits that create an economic bond between you and the USA. When these limits are exceeded, sales tax is collected and a tax refund must be made.
Also, Amazon and other similar platforms have limits of 1099k bets.
You can look here; https://sellercentral.amazon.com/gp/help/external/200663290?language=en-US&ref=mpbc_200663310_cont_200663290
Greetings,
I am a teacher who gives Online Training, all of my customers are from Turkey, my students go through a 1-month training and can repeat courses with a monthly paid membership. What confuses me here is the transaction limit, we may not be able to reach those prices in terms of turnover, but we can fill the 200 transaction limit in 1.5 months. . There is not even one person to pay from the USA. Does the number of transactions include us?
Then you may ask, why didn't you open it in Turkey? Actually, we have a sole proprietorship in Turkey, but the credit card payment infrastructure of the program we use is only available in Stripe, and we opened a company in Kentucky, USA for Stripe, just to be able to receive payments by credit card.
What do you think? We will pass 200 transactions, all of them will be payments to Türkiye, do we need a US consultant in this sense?
If your customers are not in the USA, you will not be subject to this limit. If sales were made to US citizens, you would have to collect sales tax after 200 transactions and Steipe would have you fill out a 1090K form and send it to the IRS. Then you would be faced with taxation. Continue the process until Stripe issues a tax notice to you for selling outside the country. During this period, keep records and invoices of all sales, show your expenses (server, theme, plug-in, advertising, etc.) to the US company. In case of a possible tax, you can show these records to your accountant and consider tax. You will need an accountant to fill out the next year's 5472 form. At that stage, he/she will ask for all the records from you and create a road map.
Thank you for the information, should I keep the company expenses I purchased from the USA for the USA?
By the way, I guess Stripe already keeps records of all sales automatically?
So we can get all sales reports with a single click whenever we want?
We would like to hire a suitable accountant that you would recommend for next year.
You're welcome
Stripe only keeps information such as e-mail, price, name and surname based on the information you receive. For more comprehensive data, you can use a tool such as freshbooks or I recommend you keep your preliminary accounting manually.
There is a list of CPAs specialized in accounting for many foreign companies here, you can send an e-mail and get a price. Because you will need it in the future.
https://startupsole.com/amerika-muhasebe-firmalari/
There is a billing agent within Stripe. If you specifically ask for freshbooks, I will ask, can freshbooks work in conjunction with Stripe?
Stripe is not very effective. If you actually have an income and earn it, if your earnings are constant, freshbooks will give you great relief in the long run. Stripe integrates with all known platforms such as woocommerce and shopify. You even authorize the accounting office and you can easily file your tax return from there. Check the prices, whichever package is suitable, I recommend it as it will not strain your budget.
Assalamu alaikum, I have a sole proprietorship in Türkiye. I hope my amazon professional seller account will be opened. What do I need to do to pay the VAT payment since my company is in Türkiye?
A. hello.
As far as we know, VAT procedures in Amazon TR are the same as in classical e-commerce. Your accountant will guide you on this matter.
I didn't see the state of Delaware on the list.?
There is no sales tax in Delaware, and there is no sales tax in states not on the list. There are more companies in Delaware, fewer settlements as end users, and no taxes. This means that if you sell to that state, you do not have to collect and declare sales tax.
Yes I understand. Since the sales area for the Amazon seller will be the entire USA, I think we will not be able to benefit from this advantage in Delaware. If we compare the accountant in Delaware with the accountant in Kentucky and Wioming, etc., which one do you think would be advantageous for an Amazon seller? I read your article about the advantages of Kentucky, and when I learned about the jobs to be followed throughout the year in Delaware, I wanted to get your final advice.
Now don't get confused, the state where the company is formed does not have a sales tax advantage. Let's assume that you created an llc in Delaware and made your sales to people in states such as Minnesota, Wisconsin and Vermont, and you exceeded the limits. In this case, you must apply and register with the tax administration of these 3 states and pay the sales taxes you collect to these 3 states.
This situation is often confused, that is, if there is no sales tax in the state where the company is formed, it is thought that there is no sales tax in other states. But this is not the case, sales tax is paid to the state where the sale is made, the state where the company is formed does not matter.
Now that you know this, it makes sense to form the company in the state with the lowest annual expenses. For example, in Kentucky, you can form an llc with a $40 state filing fee and a $15 annual franchise tax. Delaware and Wyoming are correspondingly more expensive. In Kentucky, your name is publicly visible on the state website, but in Delaware, confidentiality is essential and the name of the company owner is not visible. Each state has its pros and cons. At this stage, both the needs and the financial aspect of the business should be taken into consideration.
I don't fully understand whether it is necessary to fill both the 100,000 USD limit and the 200 transaction limit? So, if there are 110,000 USD and 210 transactions, does it mean that the limit has been exceeded? Or does it mean that it is 110,000 USD but 190 transactions do not exceed the limit? I would appreciate it if you could enlighten me.
Whichever is filled first, the limit is exceeded. For example, let's say you sold in a state with a $200,000 or 200 transaction limit. If you make $210,000, it fills up, or if you make 210 transactions, it fills up again, whichever comes first. I don't know if it would be the right example, but think of it as a brand new car warranty of 30,000 km or 3 years, whichever comes first.
When the limits start to be filled, you register with that state's tax administration and collect sales tax for the next year (if you foresee that the limits will be filled the next year) and the taxes collected to the state are refunded for the next year.
Yes, I understand, but I think Amazon sellers will reach the 200 transaction limit within the year. In this case, states that do not have transaction limits have an advantage.
So, I know that Amazon is a little different, taxes vary depending on your account type and company type. You may need to get professional support on this issue. I cannot give you exact information about Amazon because I do not want to mislead you. The examples here are given as if you were selling from classic E-commerce or your own site. Of course, selling to areas with high state limits or no tax will relieve the seller from the burden of sales tax.