If you’re a Canadian seller shipping to US customers — through Shopify, Amazon FBA, Etsy, or your own checkout — you almost certainly have US sales tax obligations in multiple states, even with zero physical US presence. The 2018 Wayfair decision killed the “I’m in Canada so I’m exempt” argument, and the Canada-US Tax Treaty doesn’t save you because it covers income tax only. This guide walks through every nexus rule, registration mechanic, and filing trap that hits Canadian sellers in 2026 — and how to outsource the entire mess if you’d rather build your business than learn Pennsylvania’s local tax code at midnight.
Why Canadian Ecommerce Sellers Owe US Sales Tax (Even With Zero US Presence)
The bottom line: US sales tax is a state-level tax, not a federal one. Each state writes its own rules, and since 2018 every state with a sales tax has the constitutional power to require a Canadian seller — with no US office, no US employee, no US bank account — to register, collect, and remit tax on sales delivered to that state’s residents.
The Wayfair decision in plain English
Before 2018, US sales tax nexus required some kind of physical presence — an office, an employee, inventory, or a sales rep in the state. Canadian sellers who shipped from Toronto or Vancouver and had no US footprint were generally outside the system.
That changed on June 21, 2018, when the US Supreme Court decided South Dakota v. Wayfair, Inc., 138 S. Ct. 2080 (2018), which overturned the physical-presence requirement of Quill Corp. v. North Dakota (1992) and held that a state can require an out-of-state seller to collect sales tax based on economic activity alone. The Court upheld South Dakota’s law requiring registration once a seller exceeded $100,000 in sales or 200 transactions into the state.
The decision said nothing about citizenship or country of residence. A seller in Saskatoon and a seller in San Diego are treated identically — the only question is whether your sales into a given state cross that state’s threshold.
Economic nexus: the rule that changed everything for Canadian sellers
Within 18 months of Wayfair, every state with a sales tax had passed an economic nexus law. Today, Economic nexus rules now apply broadly across states with a sales tax and the District of Columbia, though thresholds and effective dates vary. If you sell into multiple states and need a current economic nexus assessment, contact us for a current review. — and they apply to foreign sellers exactly the same way they apply to a seller in another US state.
The practical effect for Canadian ecommerce: if your Shopify store sells $120,000 USD into California in a calendar year, you have a California sales tax obligation. If you ship $40,000 USD into each of four different states, you may have four different obligations. There is no foreign-seller carve-out, no “small business” exemption above the state threshold, and no treaty relief.
Why the Canada-US Tax Treaty does not protect you
This misconception costs Canadian sellers years of accumulated liability. The Convention Between Canada and the United States of America with Respect to Taxes on Income and on Capital (1980, as amended) is an income tax treaty. Its scope, defined in Article II, covers federal income taxes and the equivalent on the Canadian side.
State sales tax is none of those things. It’s a transaction tax imposed by sub-national jurisdictions, and the treaty doesn’t apply. A Canadian corporation can simultaneously have:
- No US federal income tax obligation (no permanent establishment under treaty Article V), and
- Sales tax registration obligations in 15+ US states.
These are separate regimes. Sleeping well on the income tax side does not mean you’re sleeping well on the sales tax side.
Economic Nexus Thresholds Every Canadian Seller Must Track (2026)
The rule: every state where you ship has its own dollar threshold (and sometimes a transaction count). Once you cross it, you have a registration deadline — usually 30 to 60 days. The thresholds are denominated in USD, which is a real operational issue for a Canadian seller running a CAD-denominated Shopify store.
The $100,000 / 200-transaction baseline
The South Dakota law upheld in Wayfair used $100,000 OR 200 transactions, and most states copied it. Today, the typical state threshold is $100,000 in gross sales OR 200 separate transactions in the prior or current calendar year.
A few states use much higher dollar thresholds:
| State | Economic Nexus Threshold |
|---|---|
| California | $500,000 in sales of tangible personal property delivered into California; no transaction count |
| Texas | $500,000 in gross revenue |
| New York | $500,000 AND 100 transactions (conjunctive) |
| Mississippi | $250,000 |
States that dropped the transaction count
In the years after Wayfair, several states realized the 200-transaction prong unfairly captured tiny low-priced sellers (think a $5 sticker shop with 250 orders into a state). These states moved to a sales-only threshold:
California uses a single sales-dollar test of $500,000 with no transaction count. Colorado’s economic nexus standard turns on a sales-based threshold without a separate transaction count, but the specifics should be confirmed against current CO DOR guidance. If you are approaching Colorado’s economic nexus threshold, contact us for a current review.. Iowa uses $100,000 in the prior 12 months with no transaction count. Maine uses $100,000 in gross sales with the original 200-transaction prong eliminated. Massachusetts uses $100,000 in sales with no transaction count.
A handful of other states have followed the same path. The trend is clearly toward sales-only thresholds, but the rules turn on the fact pattern and recent legislative changes — if you’re close to a threshold in a particular state, contact us for a current review.
How thresholds are measured: gross sales vs. taxable sales vs. retail sales
This is where Canadian sellers routinely trip up. The threshold base differs by state:
- Gross sales — every dollar of revenue into the state, including exempt items, B2B wholesale, and shipping charges.
- Retail sales — excludes wholesale.
- Taxable sales — excludes both wholesale and exempt items.
Most states use gross sales, which is the broadest measure. A Canadian honey seller exporting to a US distributor (B2B wholesale) will see those orders count toward the threshold in most states, even though the wholesale sale itself is exempt with a resale certificate.
Currency: every state measures in USD. If your Shopify store transacts in CAD, you need to convert at the time of sale (or use Shopify’s USD reporting) to know where you stand. A simple monthly Bank of Canada reference rate is usually defensible, but be consistent.
Lookback period: most states test prior or current calendar year; some use trailing 12 months. The “current year” prong matters — you can cross a threshold mid-year and trigger a registration deadline before the year is even over.
For a deeper state-by-state breakdown, see our economic nexus thresholds by state page.
Physical Nexus Traps for Canadian Sellers Using Amazon FBA
The rule: sending inventory to a US Amazon warehouse — even when Amazon controls everything — can create physical-presence nexus in the warehouse state. This is independent of (and often in addition to) economic nexus.
Inventory in a US warehouse = physical nexus (in most states)
Traditional sales tax doctrine says owning tangible personal property held for sale in a state is physical-presence nexus. Amazon FBA inventory generally fits this definition because the seller — not Amazon — owns the goods until they’re sold.
California Revenue and Taxation Code §6203(c)(1) treats maintaining, occupying, or using a warehouse or storage place — directly, indirectly, or through a subsidiary or agent — as engaging in business in the state (CDTFA §6203); sellers with inventory stored in California, including through a marketplace facilitator’s fulfillment network, should evaluate registration obligations under that provision..
The practical effect: a Canadian FBA seller with stock at a California Amazon warehouse must register for a California Seller’s Permit even if 100% of California sales are facilitated and tax-collected by Amazon.
States that have softened their position post-Wayfair
Not every state takes the same hard line. Illinois has a notable carve-out:
The Illinois Department of Revenue’s Marketplace Facilitator FAQ states that if a marketplace seller’s inventory is used strictly to fulfill orders made over the marketplace, the inventory does not create physical presence nexus.
So a Canadian seller doing only Amazon FBA in Illinois — with no Shopify direct sales — may not need an Illinois registration. Add a Shopify storefront and the picture changes immediately, because the inventory is no longer “solely” for marketplace fulfilment.
Iowa has gone further: per the Iowa Department of Revenue, a marketplace seller whose only Iowa sales are through a marketplace that collects Iowa tax does not need to register or file Iowa sales tax returns. This is more generous than the Illinois rule and applies even where inventory exists.
For most other major FBA states — California, Pennsylvania, Washington, New Jersey, Texas, Florida — the conservative answer is: inventory creates nexus, register.
What about 3PL warehouses?
A third-party logistics provider operates under the same rules as Amazon FBA: your inventory is in a state, held for sale, and that’s physical presence in the conservative reading of every state’s nexus statute. The marketplace facilitator carve-outs in Illinois and Iowa generally do not extend to 3PL inventory used for direct-to-consumer fulfilment, because those orders aren’t being facilitated by a marketplace.
For a fuller treatment of FBA-specific issues, see our Amazon FBA sales tax guide.
Marketplace Facilitator Laws: When Amazon, Etsy, and eBay Collect for You
The rule: since roughly 2019-2021, every sales-tax state has passed a marketplace facilitator law requiring platforms like Amazon, Etsy, eBay, and Walmart to collect and remit sales tax on facilitated sales. This is genuinely good news for Canadian marketplace sellers — but it does not mean you can ignore registration.
What marketplace facilitator laws actually do
A marketplace facilitator law shifts the collection-and-remit obligation from the seller to the platform for transactions processed through that platform. When a US customer buys your honey on Amazon, Amazon calculates the right state and local sales tax, charges the customer, and remits it to the state. The seller doesn’t touch the tax money on those orders.
California’s Marketplace Facilitator Act became effective October 1, 2019. Illinois enacted a marketplace facilitator regime that took effect in recent years and has been refined through subsequent legislation and IDOR guidance. If you sell through marketplaces into Illinois and need to confirm collection responsibilities, contact us for a current review.. Massachusetts marketplace facilitator collection has been in place since October 1, 2019. Iowa’s marketplace facilitator law took effect January 1, 2019.
The registration question: do you still need to register?
This is the crucial nuance most generic guides miss. Marketplace facilitator collection does not automatically eliminate the seller’s registration obligation. The answer turns on three questions:
- Do you have physical-presence nexus in the state (e.g., FBA inventory)? If yes, most states still require seller registration regardless of marketplace collection. California, Massachusetts, and Maine all explicitly require it.
- Do you have direct (non-marketplace) sales into the state? If yes, you need to collect on those direct sales yourself — the marketplace doesn’t collect for them.
- Does the state offer a marketplace-only carve-out? Iowa and Illinois (with conditions) do; most others don’t.
Even where marketplace sales are collected by the platform, those sales still typically count toward your economic nexus threshold for the state. So a Canadian seller with $80,000 in Amazon-facilitated sales and $30,000 in Shopify direct sales into Texas has crossed Texas’s $500,000 threshold? No — but has crossed the $100,000 most-state threshold, and the Shopify direct sales now require registration even though Amazon is collecting on its share.
The Shopify gotcha — Shopify is NOT a marketplace facilitator
This is the single most misunderstood point in Canadian ecommerce. Shopify is a payments and storefront platform, not a marketplace facilitator. Shopify does not collect sales tax on your behalf. It will calculate and charge tax to your customer if you configure it correctly, but the obligation to register, file, and remit lies entirely with you, the seller.
A Canadian seller who runs Shopify direct + Amazon FBA has a fundamentally different compliance picture than one on Amazon alone:
- Amazon-only Canadian seller: marketplace collects on facilitated sales; obligation to register is driven mostly by FBA inventory locations.
- Shopify-only Canadian seller: full responsibility for every state where economic or physical nexus is met; register everywhere thresholds are crossed.
- Amazon FBA + Shopify Canadian seller (the most common combo): maximum complexity — register where FBA inventory creates physical nexus AND where Shopify direct sales cross thresholds.
For more on Shopify-specific obligations, see sales tax for Shopify sellers. For state-by-state marketplace rules, see marketplace facilitator laws by state.
How a Canadian Seller Actually Registers for US State Sales Tax
The bottom line: in almost every state you’ll need an EIN. You usually do not need a US LLC. You can register the Canadian corporation directly. But each state has its own portal, forms, and quirks that can stop a foreign applicant cold.
Do you need an EIN? (Usually yes)
Most state sales tax registration portals expect a US Employer Identification Number (EIN). Canadian corporations and sole proprietors can both obtain an EIN by filing IRS Form SS-4. For foreign applicants without an SSN or ITIN, the SS-4 instructions allow line 7b to be left blank or marked “foreign” — and the IRS will issue an EIN by phone (international EIN line) or fax. You do not need to be physically in the US.
A Canadian Business Number (BN) is not accepted by US state DOR portals — it’s a Canada Revenue Agency identifier and has no US recognition.
Do you need a US LLC? (Usually no)
You can register for state sales tax as a Canadian corporation directly. A Wyoming LLC, Delaware LLC, or any US entity is not required for sales tax purposes. There are reasons a Canadian seller might want a US LLC — banking access, payment processor preferences, liability separation — but none of them are sales tax reasons.
In fact, forming a US LLC just for sales tax registration introduces new complications: federal partnership return filings, state franchise taxes, registered agent fees, and potentially more state income tax filings.
State-by-state foreign entity registration mechanics
Several states have foreign-entity quirks that matter:
- California: The CDTFA Online Registration System accepts Canadian entities with an FEIN. Officers/owners typically need to provide ID — accepted alternatives for non-US individuals include passport and other government-issued ID. The application is generally free, with a possible security deposit for new accounts at the CDTFA’s discretion.
- Massachusetts: Registration via MassTaxConnect typically requires the EIN and incorporation details. Foreign entities can register, though the portal is built around US-format addresses.
- Washington: Registration runs through the Department of Revenue and the Business Licensing Service together. Foreign entities can register but the BLS sometimes flags non-US addresses for additional review.
- Pennsylvania: myPATH portal accepts Canadian corporations with an EIN. Local tax obligations (city/jurisdiction) may apply on top of state.
- Colorado: State registration via Revenue Online is straightforward — but the state has 70+ home-rule cities that administer their own tax, each with separate registration. Colorado has a substantial number of home-rule jurisdictions that administer sales tax independently of the state, and state registration alone does not necessarily cover those home-rule cities. If you sell into Colorado home-rule cities, contact us for a current review..
The Streamlined Sales Tax (SST) shortcut: the Streamlined Sales Tax Governing Board runs a single registration covering its full member states. Streamlined Sales Tax member states include Iowa among the full member states, with Tennessee as an associate member; Massachusetts is not a member (SST State Detail)., and a single SST registration replaces individual state applications. Major non-SST states (California, Texas, New York, Florida, Pennsylvania, Illinois, Massachusetts is full member, Colorado, Louisiana) still require separate registration.
For more on the EIN process, see EIN application for foreign sellers. For SST specifics, see Streamlined Sales Tax registration.
Don’t want to figure this out yourself? Sales Tax Compliance USA handles your entire US sales tax compliance — EIN, registrations, monthly filings, notice resolution — for a single fee, end to end. Book a free consultation or learn more about our service.
Filing, Paying, and the US Banking Problem
The rule: once you’re registered, you file on a state-assigned schedule (monthly, quarterly, or annual). Filing is required even when zero tax is due — a “zero return” obligation that catches Canadian sellers regularly. And paying the tax from a Canadian bank account is harder than it sounds.
Filing frequencies: monthly, quarterly, annual
States assign filing frequency based on your tax volume. Higher tax liability = more frequent filing. New Canadian registrants typically start on quarterly or annual filing because the state hasn’t seen any data yet.
Common patterns:
| Tax liability per month | Typical assigned frequency |
|---|---|
| Under ~$100 | Annual |
| $100–$1,200 | Quarterly |
| Over $1,200 | Monthly |
| Over ~$10,000–$17,000 | Monthly with prepayments |
Due dates are usually the 20th of the following month (Illinois, Colorado, Iowa, Louisiana), the last day of the month following the period (California, much of the SST states), or — earliest in the US — the 15th of the following month in Maine.
California sales/use tax monthly returns are due on the last day of the month following the period; quarterly returns are due April 30, July 31, October 31, and January 31.
How to pay state DORs without a US bank account
This is the operational headache that no software solution solves. Many state DOR payment portals reject:
- Foreign-issued credit cards (security flags, AVS mismatch on Canadian postal codes).
- International ACH (US Treasury and most state portals only accept domestic ACH).
- Wire transfers (some states accept these but charge processing fees that exceed the tax due on small returns).
Workarounds Canadian sellers actually use:
- Wise USD account. Hold a US-dollar balance with US bank routing/account numbers; many state DOR portals will accept this as domestic ACH.
- US-based merchant bank. Some Canadian sellers open a US business bank account through Mercury, Relay, or via a US-incorporated entity to solve payment friction.
- Compliance service that fronts the funds. A done-for-you provider can pay the state from its own US bank and bill you a single invoice — no DOR portal credit card friction.
Foreign credit card and ACH realities
It’s worth saying plainly: state DOR portal experiences for foreign card payments are inconsistent. A card that works for California one month may be declined the next. Some Colorado home-rule cities and some Louisiana parishes have legacy portals that don’t accept foreign cards at all. Penalties for late filing apply regardless of why payment didn’t go through, so building in a buffer (or outsourcing the entire payment workflow) matters.
Late filing and late payment penalties vary by state but most impose a percentage of tax due plus interest. California R&TC §6591 imposes separate 10% penalties for late payment and late filing, and CDTFA guidance (e.g., the Audit Manual) indicates that in some cases only the greater penalty applies rather than a strict cumulative stack (CDTFA §6591)..
Back-Filing: What If You’ve Owed Tax for Years?
The bottom line: if you’ve been selling into the US for two or three years without registering, you’re not alone — and the situation is fixable. Most states offer a Voluntary Disclosure Agreement (VDA) program that limits the lookback period and waives penalties. But you have to act before the state finds you.
Voluntary Disclosure Agreements (VDAs)
A VDA is a formal agreement between a non-compliant seller and a state DOR. The seller voluntarily comes forward, registers, files back returns for a defined lookback period, and pays the back tax plus interest. In exchange, the state typically waives penalties and limits exposure to that lookback period.
Most states cap VDA lookback at three or four years, even when actual non-compliance went back further. Without a VDA, the state can usually go back further — sometimes indefinitely if no return was ever filed.
California’s standard statute of limitations on sales tax assessments is three years from the later of return filing or due date, extended to eight years where no return was filed. Other states are similar. The “no return filed = extended SOL” rule is why proactive disclosure matters.
Lookback periods and penalty waivers
Typical VDA terms:
- Lookback: 3-4 years.
- Penalties: waived (this is the big win).
- Interest: usually still owed.
- Anonymity: most state programs allow you to start the conversation anonymously through a representative (CPA or tax attorney) before disclosing your identity.
The Multistate Tax Commission (MTC) runs a multi-state Voluntary Disclosure Program that lets a seller disclose to multiple states simultaneously through a single coordinated process. For a Canadian seller who realizes they’ve owed tax in 12 states for three years, the MTC program can be more efficient than 12 individual state VDAs.
Why DIY back-filing usually backfires
The temptation when you discover you’ve owed tax for years is to register today, file going forward, and quietly hope the state never asks about the prior period. This is the worst path. Registering for a current period without addressing the back period is a flag that the state DOR can pick up — and once you’re registered without a VDA, you’ve lost the program’s eligibility (most VDA programs require that the seller has not yet registered).
The correct sequence for a Canadian seller with back exposure:
- Quantify the back-period exposure (which states, how much tax, how many returns).
- Determine VDA eligibility (have you been contacted by the state? Already registered?).
- Apply for VDA anonymously through a representative.
- Negotiate lookback and terms.
- Register, file all back returns, pay back tax + interest.
- Move into ongoing compliance.
For deeper detail, see our Voluntary Disclosure Agreement guide.
GST/HST vs. US Sales Tax: Why Your Canadian Tax Brain Will Mislead You
The rule: if you’re trying to map US sales tax onto your GST/HST mental model, you’re going to get the wrong answer for almost every operational decision. The two systems are different in structure, scope, and mechanics.
GST/HST is federal and origin-blind; US sales tax is state and destination-based
Canada has a national value-added tax (GST) layered with provincial taxes (HST in participating provinces, PST/QST in others). One CRA registration covers your federal GST/HST obligation across all of Canada. You charge based on the customer’s province but file federally.
There is no equivalent US national tax. Each of the 45 sales-tax states administers its own system independently. There is no single registration, no single rate, no single filing. California’s combined state plus mandatory local sales tax rate is 7.25%, with district taxes that can push the combined rate above 10%. Colorado’s state-level sales tax rate is among the lowest in the country, but combined state, county, city, and special district rates in parts of the Denver metro can run substantially higher. If you need to confirm the combined Colorado sales tax rate at a specific ship-to address, contact us for a current review.. Massachusetts imposes a statewide 6.25% sales tax, and cities and towns may also impose a local option tax on restaurant meals and prepared food (Mass.gov tax rates).. Maine has a single statewide rate of 5.5% with no local sales tax. Louisiana’s state rate is 5%, with combined state-plus-parish rates reaching approximately 11.45%.
Input tax credits don’t exist in US sales tax
This is the most jarring difference for Canadian sellers. Under GST/HST, you collect tax on sales and claim input tax credits (ITCs) on tax you paid on inputs — the net is what you remit to CRA. Under US sales tax, there is no input credit. Sales tax is a single-stage consumption tax: you charge it to the end customer at retail, you remit the full amount to the state, and tax you paid on your own business inputs is just a cost.
This means a Canadian seller importing from China, paying state sales tax on US business expenses, has no recovery mechanism for that tax. The only relief is to use resale certificates on inventory purchases for resale (where applicable).
Resale certificates are the closest US analog (and they’re state-by-state)
A resale certificate exempts a B2B wholesale purchase from sales tax — the buyer (your customer or you, depending on direction) certifies they’ll resell the item and collect tax at that later sale. There is no national resale certificate; each state has its own form. Some states accept the Multistate Tax Commission’s Uniform Sales & Use Tax Resale Certificate; others (notably California) require their own state-specific form.
Product taxability differs wildly:
- Clothing: exempt in Pennsylvania, Minnesota, New Jersey; taxed in most others; partial exemption in Massachusetts (under $175 per item).
- Food / grocery: exempt in California (broad), Colorado, Iowa, Maine, Massachusetts; taxable at full or reduced rate in others.
- Candy: taxable in most states (treated as separate from food) — but California’s food products exemption under Regulation 1602 reaches a broader set of grocery items than many other states’ exemptions, and the treatment of specific items turns on the regulation’s definitions (CDTFA Reg. 1602). If you sell food products into California and need to confirm taxability of a specific SKU, contact us for a current review..
- Dietary supplements: taxable in most states; exempt in a few including Iowa.
- SaaS: wildly inconsistent. California does not tax true SaaS / time-sharing computer services, but electronically delivered prewritten (canned) software is taxable; custom software may be nontaxable (CDTFA Reg. 1502).; Cloud computing services, including SaaS, are generally not taxable in Massachusetts, while sales of prewritten software remain taxable (DOR Letter Ruling 12-8).; Louisiana has moved to expand sales tax to digital products and certain SaaS offerings under recent legislation, with effective dates and scope that should be confirmed against current LDR guidance. If you sell SaaS into Louisiana, contact us for a current review.; many states are silent or have shifting positions.
For more on SaaS specifically, see SaaS sales tax by state.
The Done-For-You Alternative: Stop Reading Tax Code at Midnight
The bottom line: every Canadian seller eventually faces the same choice — learn 50 state tax codes yourself, hire a software platform that hands you a dashboard and walks away, or outsource the whole thing to a service that runs your compliance end-to-end.
Why software-only solutions fail Canadian sellers
the major SaaS sales tax platforms are software platforms. They calculate tax, sometimes file returns, and give you a dashboard. What they don’t do:
- Apply for your EIN on Form SS-4.
- Handle your state-by-state registrations as a foreign entity.
- Open the envelope when a state DOR sends a paper notice to your Toronto address (or, more commonly, to the wrong address you used during registration).
- Negotiate a Voluntary Disclosure Agreement when you discover three years of back exposure.
- Resolve audit correspondence.
- Manage exemption certificates from your B2B customers.
- Pay the tax when your Canadian credit card gets declined by Colorado’s portal.
The software model assumes you have a US-based controller or a US accountant managing the operational layer. Canadian solo founders rarely do.
What a full-service compliance practice actually does
A done-for-you sales tax practice handles the entire workflow:
- Nexus assessment: which states do you actually have obligations in (vs. the 50-state default that software pushes).
- EIN application: Form SS-4 filed for your Canadian corporation.
- State registrations: every state where nexus is met — California, Pennsylvania, Washington, Texas, the SST application for the easy states, the home-rule cities in Colorado.
- Monthly/quarterly/annual filings: prepared, reviewed, filed, paid.
- Notice resolution: when a state sends a notice (and they will), it gets handled.
- VDA negotiation: if back exposure is discovered, the practice runs the disclosure through to closing.
- Audit defense: if a state opens an audit, the practice represents you.
- Exemption certificate management: for B2B sellers, certificates collected, validated, and renewed.
Flat-fee, single-payment compliance for non-US founders
The practice model that works best for Canadian ecommerce sellers:
- One flat fee covering registration, ongoing filings, and notice handling — not a per-state-per-month software subscription that doesn’t include the work.
- One point of contact — a tax practitioner who knows your business, not a chatbot.
- No software for you to learn — you keep selling on Shopify and Amazon; we run the compliance layer.
Sales Tax Compliance USA was built specifically for non-US founders: Canadian Shopify sellers, Australian Amazon FBA sellers, UK-based wholesalers shipping into the US, South African ecommerce brands launching North American storefronts. We handle EIN, registration, filing, remittance, notices, VDAs, and audit defense as one service for one fee.
Don’t want to figure this out yourself? Sales Tax Compliance USA handles your entire US sales tax compliance — registration through filing — for a single fee, no software for you to learn. Book a free consultation or learn more about our service. For Canadian sellers specifically, see our foreign seller sales tax services page.
Frequently Asked Questions
Do Canadian ecommerce sellers really have to collect US sales tax?
Yes, in any state where you cross the economic nexus threshold or have physical-presence nexus (typically FBA inventory). The 2018 Wayfair decision applies equally to foreign and domestic sellers. There is no Canadian-seller exemption.
What is the sales tax threshold for Canadian sellers in the US?
There is no single threshold — each state has its own. The most common is $100,000 in sales OR 200 transactions in the prior or current calendar year. California uses $500,000 with no transaction count; Texas uses $500,000; Mississippi uses $250,000; New York uses $500,000 AND 100 transactions.
Can I register for US sales tax without a US bank account?
Yes, you can register without a US bank account. Paying the tax later is a separate problem — many state DOR portals reject foreign credit cards and international ACH. Workarounds include a Wise USD account, a US business bank account, or a compliance service that fronts the payments.
Do I need a US LLC to register for sales tax as a Canadian seller?
No. You can register as a Canadian corporation directly. A US LLC is not required and creates additional complications (federal partnership returns, state franchise taxes, registered agent fees) without solving any sales tax problem.
Does Amazon collect US sales tax for me as a Canadian FBA seller?
Amazon collects and remits sales tax on Amazon-facilitated sales in every state with a marketplace facilitator law (effectively all sales-tax states). However, FBA inventory still typically creates physical-presence nexus requiring you to register, and any non-Amazon (e.g., Shopify) sales remain your responsibility.
Do I still need to register for sales tax if I only sell on Amazon and Etsy?
It depends on the state and your inventory location. Iowa explicitly says marketplace-only sellers don’t need to register. Illinois has a similar carve-out where inventory is solely for marketplace fulfilment. Most other states require registration where physical-presence nexus (FBA inventory) exists, even if 100% of sales are facilitated.
Does the Canada-US Tax Treaty protect me from US sales tax?
No. The treaty covers income tax only. State sales tax is a sub-national tax outside the treaty’s scope. A Canadian corporation can have zero US federal income tax obligation under the treaty and still owe sales tax in 15+ states.
How many years back can a US state come after me for unpaid sales tax?
Typically 3-4 years where returns were filed; longer (often 8+ years, sometimes indefinitely) where no return was ever filed. Voluntary Disclosure Agreements typically cap lookback at 3-4 years and waive penalties — but VDA eligibility requires that the state hasn’t already contacted you.
Is Shopify a marketplace facilitator that collects US sales tax for me?
No. Shopify is a payments and storefront platform, not a marketplace facilitator. It will calculate tax and charge your customer if you configure it correctly, but registration, filing, and remittance are entirely your responsibility.
Can I get an EIN as a Canadian sole proprietor without an SSN or ITIN?
Yes. File IRS Form SS-4. For foreign applicants without an SSN or ITIN, the form allows line 7b to be left blank or marked “foreign,” and the IRS will issue the EIN by phone (international EIN line) or fax. You don’t need to be in the US.
What happens if I ignore US sales tax obligations as a Canadian seller?
States can assess back tax, penalties, and interest, and can pursue collection through various means including liens. Marketplace platforms (Amazon, Etsy, eBay) periodically audit seller compliance and have suspended seller accounts for non-compliance with state registration in some cases. Ignoring obligations also forfeits VDA eligibility.
How much does it cost to register and file US sales tax across multiple states?
Software-only solutions charge per-state per-month subscriptions plus filing fees, with the seller still doing registration and notice work. Done-for-you services like Sales Tax Compliance USA charge a single flat fee covering registration, filing, payment, and notice resolution end-to-end. Contact us for a quote based on your actual state footprint.
Last verified: May 10, 2026.
This article is for informational purposes only and does not constitute tax advice. Consult a licensed tax professional before acting on any of this content.
