Foreign Sellers Guide to US Sales Tax Compliance 2026

The US Supreme Court’s 2018 South Dakota v. Wayfair decision eliminated the physical presence requirement for sales tax collection. A seller based in Canada, the UK, Australia, or anywhere else in the world now faces the same economic nexus obligations as a US-based seller once they cross a state’s revenue threshold.

This guide is for businesses incorporated outside the US that sell directly to US customers. It covers how economic nexus applies internationally, how to register without a US address or SSN, and the additional IRS reporting requirements that apply to foreign-owned US entities.

How Wayfair Applies to Foreign Sellers

South Dakota v. Wayfair (2018) held that states may require out-of-state sellers to collect sales tax based purely on economic activity in the state — sales volume, not physical presence. Every state with a sales tax has enacted an economic nexus law based on this ruling.

These laws do not distinguish between domestic and foreign sellers. A seller based in Germany with $150,000 in annual sales into Texas has Texas economic nexus just as a California-based seller would. The obligation to register, collect, and remit Texas sales tax applies equally.

The general thresholds:

Most states: $100,000 in gross revenue per year (calendar year or rolling 12 months, depending on the state)
California, Texas, New York: $500,000
No-sales-tax states: Alaska (no statewide tax; local jurisdictions apply separately), Delaware, Montana, New Hampshire, Oregon — no obligation

Transaction thresholds: Many states previously used 200 transactions as an alternative nexus trigger. This is being phased out. Illinois and Utah eliminated their transaction thresholds in 2025; Alaska’s elimination took effect in 2026. The baseline is now revenue-only for most states.

There is no grace period and no minimum for international sellers in the same way there is none for domestic remote sellers. Once you cross the threshold in a state, you owe tax on all taxable sales into that state from the moment of crossing (or in some states, from the start of the quarter or year in which you crossed).

Marketplace Facilitator Laws — Your First Shield

If you sell through Amazon, Etsy, eBay, Walmart Marketplace, TikTok Shop, or any other platform with a marketplace facilitator law in place (currently 49 states + DC), the marketplace collects and remits sales tax on your behalf. You do not collect or remit for those sales.

This significantly reduces your compliance burden as a starting point. A foreign seller operating exclusively through Amazon or Etsy has no direct sales tax collection or filing obligation in the US — the marketplace handles it.

The complication: marketplace-facilitated sales still count toward your economic nexus thresholds. If Amazon generates $90,000 of sales on your behalf in California and you separately make $60,000 in direct sales through your own Shopify store, your combined California revenue is $150,000. You have not crossed California’s $500,000 threshold, so no nexus yet — but your combined total is the number that matters, not just the Shopify portion.

Direct Sales and Your Own Store

If you sell through your own website, WooCommerce, Shopify, BigCommerce, or via direct invoicing, you are the seller of record. You are responsible for:

Monitoring whether you have crossed nexus thresholds in each state
Registering with that state’s tax authority before or upon crossing
Configuring your platform to collect the correct rate
Filing returns and remitting on each state’s schedule

Registering for a Sales Tax Permit Without a US Address

Most states technically require a US address for their online registration portals. In practice, foreign sellers can navigate this:

Option 1: Register Directly Using Your Foreign Address

Some states accept foreign addresses in their registration systems. These include most states if you select the correct entity type (foreign corporation or non-US sole proprietor) during registration. You will need to experiment with the state’s Department of Revenue portal — or work with a tax professional who has done this before for each specific state.

Option 2: Appoint a Registered Agent

Many foreign sellers use a US-based registered agent — a service that provides a US address and accepts official correspondence on your behalf. Registered agents are available from $50–200/year per state through services like Northwest Registered Agent, Incfile, or CT Corporation. Some states require a registered agent for foreign entities; others make it optional.

Option 3: Use a Sales Tax Compliance Service

Services like Avalara, TaxJar, Taxually, or a tax consulting firm can handle state registrations on your behalf. They have established processes for foreign seller registration and can often navigate state-specific quirks that would otherwise require multiple attempts.

What You Need to Register

Regardless of method, you will typically need:

Your business’s legal name, country of incorporation, and principal address
Your business type (corporation, LLC, sole trader, partnership)
An EIN (Employer Identification Number) — required by most states and by the IRS for any foreign entity transacting in the US. Apply via IRS Form SS-4 (can be done by phone or fax for foreign entities without a US office; allow 4–6 weeks).
A description of your products or services
An estimate of expected annual US revenue

You do not need a US Social Security Number (SSN) as a foreign business entity. The EIN substitutes for this purpose.

EIN — The Non-Negotiable First Step

An Employer Identification Number (EIN) is a federal tax identification number issued by the IRS. It is not a US sales tax registration; it is a prerequisite for most state registrations and for certain IRS filings.

How to get an EIN as a foreign entity:

By phone: Call the IRS Business and Specialty Tax Line at +1 (267) 941-1099 (not a toll-free number). Available Monday–Friday 6am–11pm ET. Have your business details ready; the IRS agent will ask questions and issue the EIN in the same call.
By fax: Complete IRS Form SS-4 and fax it to +1 (855) 215-1627. Expect 4–6 business days.
By mail: Send Form SS-4 to the IRS. Allow 4–6 weeks.

The online EIN application is only available to entities with a US taxpayer identification number (SSN or ITIN). Foreign entities without a US TIN must use phone, fax, or mail.

US Entity Structures — The Trap for Foreign Founders

Many foreign founders incorporate a Delaware or Wyoming LLC to access US payment processors (Stripe, PayPal, Square), establish US banking, and simplify contracting with US customers. This is common and legal.

The risk is the IRS reporting obligations that come with a US entity owned by a foreign person.

If you are a non-US person who owns a single-member US LLC, that LLC is a Foreign-Owned Disregarded Entity (FODE) for US federal tax purposes. You must file IRS Form 5472 annually to report transactions between the LLC and related foreign parties (including you, the owner).

The penalty for failing to file Form 5472 is $25,000 per violation. The IRS has been enforcing this aggressively since 2017.

Sales tax compliance (state-level) and Form 5472 compliance (federal-level) are separate obligations. Having your US LLC registered for state sales tax does not satisfy your federal reporting requirements.

See Form 5472 and the Foreign-Owned LLC Trap for the full detail.

Practical Compliance Roadmap for Foreign Sellers

Step 1 — Obtain an EIN Do this first. Most everything else depends on it.

Step 2 — Audit your current US sales by state Pull your last 12 months of US orders, identify each customer’s state, and total revenue per state. Compare against each state’s threshold to identify where you have or are approaching nexus.

Step 3 — Identify marketplace-facilitated vs. direct sales Sales through Amazon, Etsy, eBay, etc. are the marketplace’s responsibility for tax collection. Direct sales through your own store are yours. Track both for nexus monitoring purposes.

Step 4 — Register in nexus states For each state where you have crossed or are close to crossing the threshold, register for a sales tax permit. Prioritise states with the largest revenue concentrations and those with the lowest thresholds (i.e., not California, Texas, or New York if you are below $500,000 in those states).

Step 5 — Configure collection on your platform Turn on tax collection in your store or billing system for each registered state. Use Shopify Tax, Stripe Tax, or a third-party calculation engine.

Step 6 — Establish a filing schedule Determine each state’s filing frequency requirement for your volume tier. Set up reminders or engage a compliance service to file and remit on your behalf.

Step 7 — Set up Form 5472 filing if applicable If you own a US LLC as a foreign person, ensure you have a US tax professional (CPA or enrolled agent with international tax expertise) handling your Form 5472 annual filing. The deadline is the LLC’s tax return deadline — typically April 15 or with extension, October 15.

Common Mistakes

Assuming marketplace sales mean no obligation. Amazon or Etsy handles collection for their platform; your direct-channel sales and aggregate nexus monitoring remain your responsibility.
Registering without an EIN. Most state portals will reject your application without one.
Setting up a US LLC and forgetting IRS obligations. A Delaware LLC gives you Stripe access; it also gives you Form 5472 exposure. The $25,000 penalty is per violation, per year.
Not monitoring nexus as revenue grows. A seller who is below thresholds today may cross multiple state thresholds within a single quarter as sales grow. Nexus tracking must be continuous, not a one-time exercise.
Assuming the 200-transaction threshold still applies. Many sellers recall hearing “200 transactions OR $100,000” as the nexus trigger. Numerous states have eliminated the transaction alternative — Illinois and Utah in 2025, Alaska in 2026, and the trend is continuing. Revenue is now the primary metric in most states.