Do Non-US Businesses Need to Collect US Sales Tax?

Imagine you’re running a fast-growing e-commerce store in the UK. One morning, you log into your Amazon Seller Central dashboard only to see your payouts frozen. 

The reason? A state in the US claims you owe state sales tax, but you’ve never even set foot there. Unfortunately, this isn’t a rare scenario.

US sales tax rules are notoriously complex, making the situation worse for international founders.

There’s no federal sales tax. Each state sets its own rules, and what triggers tax liability in one state might not in another. It’s easy to get it wrong, which can lead to:

• Retroactive penalties and interest on unpaid taxes

• Frozen revenue by platforms like Amazon, Stripe, or PayPal

• Legal notices, forced US business registrations, and even bans from marketplaces

Not sure whether non-US businesses need to collect US sales tax?

Luckily, you don’t need to be a US tax expert to stay compliant. doola’s Sales Tax & Reseller Certificate services will give you clarity, confidence, and a clear path forward.

We can take it off your plate entirely, with done-for-you registrations, filings and compliance monitoring.

Let’s start with everything non-US founders need to know about US sales tax, from when you’re liable to how to stay compliant. 

What Is US Sales Tax? How Does It Work?

Unlike VAT or GST systems used in many countries (where value-added taxes are applied at multiple stages of production), the US sales tax model is destination-based and final. 

It only applies when a product or service is sold to the end customer, and it’s the seller’s responsibility to collect and remit that tax to the appropriate state.

However, it’s not as simple as it sounds. Here’s what makes it particularly complex for non-US businesses:

• The U.S. government doesn’t charge a nationwide sales tax. Instead, individual states and counties set their rates and rules, leading to over 13,000 tax jurisdictions.

• Some states tax digital goods and SaaS, others don’t. Some require sales tax registration, even if you don’t have a U.S. presence.

• Many founders confuse the income tax with sales tax. Income tax is paid on your business profits, while sales tax is collected from customers and passed on to the state.

For global founders, this fragmented system means that selling to customers in just a few U.S. states may create tax obligations, without any physical office or U.S. entity.

Do Non-US Businesses Ever Need to Collect US Sales Tax?

Yes, non-U.S. businesses can be required to collect and remit U.S. sales tax, even without a physical presence in the United States.

You don’t need a U.S. passport to owe U.S. sales tax,  just U.S. customers. If you’re selling products or services to people in certain states, you could be on the hook for sales tax.

This obligation comes down to a concept called “nexus.” Nexus is a legal term that means a business has a sufficient connection to a state to be subject to its sales tax laws.

Even fully digital businesses like SaaS platforms can trigger nexus. Some states tax digital goods and online services, and do expect non-U.S. sellers to register and collect.

The good news? You don’t have to figure this out alone. doola can help you pinpoint exactly when you become liable, and what to do next.

We automatically track where you have nexus, understand your filing responsibilities, and fulfill every obligation on your behalf to keep you compliant in every state. 

What Is Nexus? Why Does It Matter?

Having a nexus means even if you’re based in London, Dubai, or Singapore, the moment your business hits a certain threshold in a U.S. state, you’re required to collect and remit sales tax.

There are three main types of nexus you need to know:

Now, that you understand the types of nexus, let’s zoom in on the most common one for international founders: economic nexus.

This is based on your business activity, not your address. However, each U.S. state has different thresholds for non-U.S. businesses and e-commerce founders. For instance:

• California: $500,000 in sales

• Texas: $500,000 in sales

• New York: $500,000 in sales and 100 transactions

• Florida: $100,000 in sales

If you sell on marketplaces like Amazon or Etsy, you can trigger multiple nexus points and may still be responsible for compliance.

For example, if you’re using Fulfillment by Amazon (FBA), you have physical nexus since Amazon stores your inventory in its U.S. warehouses. 

Even though Amazon collects and remits sales tax in many states, you still need to register for a sales tax permit in states where your goods are warehoused.

Other platforms, such as Etsy and eBay, fall under “marketplace facilitator” laws, which means they are required to collect and remit sales tax on your behalf in many states. 

However, not all states have facilitator laws, and you might need to register for compliance tracking, which depends on where your customers are, how much you sell, and the local laws.

If you’re still unsure whether you’ve triggered Nexus, ask yourself these simple questions.

If you answered “yes” to any of these questions, you likely have established a nexus in one or more US states.

✅ Do I sell over $100,000 worth of products or services to U.S. customers annually?

✅ Have I made 200+ transactions into any single U.S. state?

✅ Do I use Amazon FBA or store inventory in the U.S.?

✅ Do I sell on a marketplace like Etsy or eBay?

✅ Do I ship physical goods to U.S. consumers from abroad?

✅ Do I run a Shopify, WooCommerce, or custom e-commerce store targeting the U.S.?

✅ Have I hired a U.S.-based contractor or team member?

What Happens If You Don’t Collect Sales Tax as a Non-US Business?

U.S. states don’t care where your business is based. If you have a nexus there, you’re expected to comply, or else your business is at risk of their repercussion.

You Can Receive Legal Notices from U.S. States

States track nexus through marketplace data, shipping records, and public filings. If they detect you’ve crossed a threshold, they may send legal notices, which they do internationally.

Platforms Can Freeze or Withhold Your Money

Payment processors and marketplaces don’t want to get caught in the middle of tax violations. If a state flags your business for non-compliance, platforms like:

• Stripe can suspend payouts or even ban your account

• PayPal may hold your funds until you prove tax registration

• Amazon can withhold earnings or suspend your FBA listings

A UK e-commerce brand selling custom t-shirts hit $120K in sales to U.S. customers without registering for sales tax. 

Texas sent a notice. Within weeks, Amazon froze its account. It took them 3 months and $6,500 in legal fees to get reinstated.

You Risk Damaging Your Brand & Customer Trust

Sales tax may seem like a back-end issue, but if you’re caught off guard, it becomes a front-end problem fast:

• Customers may see sudden price hikes if you start charging tax late

• Bad reviews can pile up if orders get delayed due to account holds

• Trust declines when a once-smooth experience turns into a tax headache

None of this is good for any business, but you don’t have to go at it alone. We can help you fix past mistakes, prevent future ones, and keep your business protected.

Here’s how doola helps non-U.S. founders like you every day:

✅ Nexus audit: We determine if you have (or had) nexus in any U.S. state

✅ State registration: We register you for sales tax in the right jurisdictions

✅ Ongoing compliance: We automate your filings and payments, so you never fall behind again

Ready to stay ahead of the game? Book a demo today!

How to Register for Sales Tax as a Non-US Business

By now, you know that non-compliance with U.S. sales tax laws isn’t something you can afford to ignore.

So, what’s the next step? Getting registered correctly and in the right state.

Here’s a practical step-by-step breakdown to help you navigate it confidently (without falling into the red tape trap).

Step 1: Determine Where You Have Nexus

Before registering anywhere, you need to understand where you’re legally required to collect and remit sales tax. 

Your nexus footprint, which could be economic, physical, or marketplace-driven, determines this.

You don’t need to register in all 50 states, just those where you’ve triggered nexus.

Step 2: Get a U.S. EIN (Employer Identification Number)

Almost every U.S. state will ask for an EIN before allowing you to register for sales tax. This is a federal tax ID issued by the IRS, and it’s required even if your business is 100% foreign.

This step alone can take 1–4 weeks, depending on how you file, but doola can get your EIN for you fast.

Step 3: Apply for a Sales Tax Permit in Each Nexus State

Once you have an EIN, you need to register with each state where you’ve triggered nexus. Sounds simple, right? Not quite.

The process varies state by state, and each state has a different application portal, unique documentation requirements, and specific rules for non-resident businesses.

You’ll also need to submit your passport or national ID, foreign address verification (like a utility bill or business registration), and business formation documents.

There are also some state-specific complications to watch out for. For example, in Florida, you can only mail applications, and Colorado’s portal often rejects foreign addresses.

Step 4: Set Up Systems to Collect and Remit Sales Tax

Once registered, you’ll receive a sales tax permit and be assigned a filing frequency (monthly, quarterly, or annually).

For this, you must collect the correct sales tax at checkout (by state, county, and city), file returns even in months with zero sales, and remit payment to each state on time.

This is where automation becomes critical. Doing this manually, for multiple states, is a compliance nightmare.

It’ll help you streamline sales tax collection, filing, and payments while managing complex rate structures, platform-specific rules, and frequent tax holidays.

Want to stay compliant from day one? Book a demo today!

How to Stay Compliant Once You’re Registered

Registering for U.S. sales tax is only the first step. The real challenge begins when you stay compliant month after month, state by state.

Let’s break down what this actually looks like.

Filing Isn’t Uniform

Each U.S. state has a different filing frequency (monthly, quarterly, annually, based on your volume), due dates, and return formats.

If you’re registered in 10 states, you might be dealing with three monthly returns, five quarterly, and two annual filings.

And guess what? Even missing one can lead to penalties.

Common Mistakes That Trigger Penalties (and Audits)

Even well-meaning businesses slip up, especially international ones unfamiliar with U.S. rules. Here are some real-world examples of what can go wrong:

• Filing late because you missed a deadline or didn’t realize your frequency changed

• Failing to file zero returns, which some states treat as non-compliance

• Underreporting because of misconfigured Shopify settings or manual data errors

• Not separating marketplace vs. direct sales, leading to double-counting or underpayment

• Mismatched data between payment processors and your return

The Right Tools Make or Break Compliance

Staying compliant means more than just remembering dates. You need a system that:

• Integrates with your platforms (Shopify, Stripe, Amazon)

• Tracks sales data by state and category

• Generates returns automatically

• Files on your behalf

• Alerts you to changes in thresholds or filing status

This isn’t a one-person job. It’s a workflow that needs to run like clockwork. Here’s how doola makes compliance effortless:

Why Compliance Is Hard & Where doola Can Help

For international founders, it often feels like trying to play a game where the rules change by state, the referee doesn’t speak your language, and missing a move costs you money.

Let’s walk through the real pain points and how doola turns them into solved problems.

Leave Sales Tax Compliance to doola

You didn’t start your business to worry about tax law in 50 different states. 

But the reality is that if you sell to U.S. customers, even from abroad, you can be on the hook for sales tax. Ignoring it is not an option.

At doola, we make U.S. sales tax compliance simple, fast, and stress-free for non-U.S. founders:

✅ We determine where you have nexus 

✅ Register your business in every required state

✅ File every monthly, quarterly, or annual return

✅ Keep you audit-ready with zero missed deadlines

We take sales tax off your plate so you can focus on growing your business instead of decoding U.S. tax codes.

No stress. No guesswork. Just full compliance, done for you.

FAQs

Do I need to collect sales tax if I only sell digital products in the US?

Yes, if your business meets a nexus threshold in a state that taxes digital goods, you’re legally required to register, collect, and remit sales tax (even as a non-U.S. business).

Which US states are the strictest about taxing non-US businesses?

States with aggressive enforcement or low/no nexus thresholds include Texas, California, Florida, Colorado, and Washington.

These states are known to send notices to non-compliant foreign businesses, especially those on Shopify or Amazon.

Can I get a US sales tax permit without a US business entity?

No, most states allow foreign entities to register for a sales tax permit, as long as you provide a valid EIN (Employer Identification Number) and proof of business and foreign address.

Does using Amazon FBA automatically create nexus for me?

If Amazon stores your inventory in U.S. warehouses (FBA), you’ve triggered physical nexus in those states even if you never set foot in the U.S. 

What if I accidentally collected sales tax without registering properly?

If you’ve collected sales tax without a permit, some states may require you to register retroactively, charge penalties or interest, or ask you to remit the collected tax immediately.