Where should I collect taxes?

You're required to register to collect sales tax in states where you have nexus, or a physical presence that's significant enough for you to be required to comply with that state's sales tax laws.

Sales tax nexus occurs when your business has some kind of connection to a state. All states have a slightly different definition of nexus, but most of the time states consider that a “physical presence” or “economic connection” creates nexus. You only have to charge sales tax in the states in which you have sales tax nexus.

You'll always have nexus in your home state where you are located, and the most common causes for nexus in other states are:

Note: If you're an Amazon FBA seller, TaxJar will automatically tell you the states where you have nexus because of FBA inventory. 

This blog post contains more details about nexus and sales tax collection that you may find helpful.

Economic nexus

If you need help understanding where you may need to register due to economic nexus, TaxJar can help! 

  •  If you are on a TaxJar Professional plan, you can use the Economic Nexus Insights tool in your account to help you determine where you already have nexus and where you’re approaching nexus. Learn more about how to use this tool here. 
  • If you are on a TaxJar Starter plan, you can use the Sales and Transaction Checker in your account to help you identify where you may have crossed the thresholds for economic nexus. Learn more about how to use this tool here.

Once you know where you have nexus, the next step is registering for a sales tax license, because the states expect you to register before collecting any sales tax. We talk about the timing of registering on our blog.

If you’d like help registering in additional states, TaxJar can help! Learn more about our registration offering here.