Sales tax nexus for online sellers: Wayfair, marketplace facilitators, and FBA inventory

Since the Supreme Court's 2018 decision in South Dakota v. Wayfair, states can require out-of-state sellers to collect sales tax based on sales volume alone. Every state with a sales tax has done so.

Economic nexus

Most states set the threshold at $100,000 of sales into the state, usually measured over the current or prior calendar year. A few use higher numbers: $250,000 in Alabama and Mississippi, $500,000 in California and Texas, and in New York more than $500,000 plus more than 100 sales. Lookback periods also vary. Texas uses the prior 12 months, and New York uses the prior four sales tax quarters. Many states have dropped the old 200-transaction test, but some still use it.

States also differ on what counts toward the threshold. Some count gross sales, others only taxable or retail sales, and some include marketplace sales.

Marketplace facilitator laws

All sales tax states now require marketplaces like Amazon, Etsy, eBay, and Walmart to collect and remit tax on sales made through them. For a pure marketplace seller, that removes most of the burden, but some obligations remain with the seller:

• Sales through your own site, such as a Shopify or WooCommerce store, are your responsibility once you have nexus.
• Some states still require marketplace-only sellers to register or file zero-tax returns.
• Wholesale sales need resale certificates.

Key numbers: most states $100,000 of sales · AL, MS $250,000 · CA, TX $500,000 · NY $500,000 plus 100 sales · inventory in a state is physical presence regardless of sales.

FBA and 3PL inventory

Inventory stored in a state is physical presence. With FBA, Amazon may place your products in warehouses across many states, and that inventory can create:

• Sales tax nexus for non-marketplace sales into those states.
• Income or franchise tax filing obligations. Public Law 86-272 protects only sellers of tangible goods whose in-state activity is limited to soliciting orders, and inventory storage generally goes beyond that. The law also covers only net income taxes, never gross receipts taxes such as Washington's B&O tax or Ohio's CAT.

Amazon's inventory event reports show where your goods have been.

In Connecticut

Connecticut kept the transaction count and requires both tests. A remote seller must register once it has at least $100,000 of gross receipts and 200 or more retail sales into the state in the 12 months ending the previous September 30, and DRS guidance counts marketplace sales toward that test. Inventory at a marketplace facilitator's Connecticut warehouse requires registration even below those numbers. Goods held by an unaffiliated fulfillment company that is not a marketplace and ships your orders out of state don't, by themselves, make you a Connecticut retailer. Our Connecticut guide covers the rest of the state's rules.

Cleaning up past exposure

If you've had nexus without registering, voluntary disclosure agreements typically limit the look-back to three or four years and waive penalties. You still owe interest, however, and tax you collected but never remitted is owed for every period. Once the state has contacted you, you generally can't apply. Register prospectively, quantify exposure, and prioritize the states with the largest liabilities. The Streamlined Sales Tax project offers simplified registration in member states.

A worked example

A Shopify brand sells $2.1M a year: 60% through its own site and 40% on Amazon with FBA. A nexus review finds economic nexus in 14 states, several of which count its Amazon sales toward the threshold, and its website sales into those states must now be taxed. FBA inventory creates physical presence in 9 more states. The brand registers in 23 states, sets up automated collection, and enters voluntary disclosure in four states with past exposure.

Common mistakes

1. Assuming Amazon's collection covers all your channels.
2. Ignoring income tax nexus created by FBA inventory.
3. Charging tax on exempt items or using the wrong rate source.

How Summer Associates helps

Summer Associates runs nexus studies from your sales and inventory data, handles registrations and voluntary disclosures, and sets up filing workflows.

This guide is general education based on federal and Connecticut law as of 2026-11-15. State rules differ and facts matter. Before acting, get advice for your situation from Summer Associates or another qualified advisor.