International Sales Tax 101

Do International Sellers Have to Deal with Sales Tax in the US?

by Mark Faggiano

International sellers U.S. sales tax
One of the best things about our Sales Tax for eCommerce Sellers Facebook group is that we get a cross-section of online sellers. That includes some sellers who aren’t based in the United States at all.

Inspired by our international members, we thought we would take a look at the various scenarios that they face, and try to determine when and how international sellers have to deal with sales tax in the United States.

For the purposes of this article, we are not going to go into customs duties, import taxes or any of the other many taxes that an international seller might face doing business in the United States.

You are an international seller, with no physical presence in the United States

Congratulations! While you may have to deal with customs and import taxes, as of this writing, you do not have to collect or remit sales tax. Cheers!

You are an international seller, who warehouses items in the U.S., such as in an FBA Warehouse

Even though you may live outside the United States, if you sell on FBA or have established any other type of sales tax nexus in the United States (such as an employee, office, a satellite branch of your business, or a warehouse where you store inventory), then you must comply by the sales tax laws of the state where you have nexus.

You can find out more about sales tax laws in various U.S.  states on TaxJar.com.

You are a non-U.S. Citizen, but you live in and have “nexus” in the United States

As with the example above, you must comply with state sales tax laws, no matter your legal status. We have one customer who lives in the U.S. but his citizenship status is “non-resident alien.” That type of legal status, though, which is a person’s legal standing in the country, shouldn’t be confused with “nexus.”

Even though our customer isn’t a citizen of the United States, he runs his business from and stores inventory in California, which means that he has sales tax nexus in that state and must collect and remit sales tax.

If U.S. “Internet Sales Tax” passes…

In the past we have often talked about how the Marketplace Fairness Act, the Remote Transaction Parity Act or the Sales Tax Simplification Act of 2016 would affect U.S.-based sellers. But if you are an online seller based in a non-U.S. country, an “internet sales tax” law could change the rules for you, too. Keep following the TaxJar blog for updates on internet sales tax.

Sales Tax Resources for International Sellers

So you think you may need to get sales tax compliant in the U.S. We highly recommend that international sellers contact an expert. Depending on what part of the world you are from and what your business activities in the U.S. entail, you may have complex tax requirements.

We recommend these CPA firms for international sellers:

Are you an internationally-based online seller who sells in the U.S.? Do you deal with sales tax nexus? We’d love to hear your story!

  • Living Abroad

    so by meeting the physical presence test of not being in the US, technically, a US citizen living in a foreign country can be considered an international seller for State Sales Tax Purposes?

    • taxjar

      This is a very good question. We don’t give tax advice at all, but one of our contractors lived abroad for awhile and the double income taxation situation for her was a nightmare. If you live abroad, I highly recommend you check with your accountant to find out about your tax liability.

      As for sales tax, from what we understand, if you don’t have a physical presence in a state, you do not need to collect sales tax there. But if you have any kind of physical presence – office, an employee (or sometimes even a contractor), a warehouse, a store, etc. – then you have established sales tax nexus and must collect.

      • Nordic Seller

        And FBA stock=physical presence? Is this flexible IYO.

        • Flexible in what way?

          Each of the states say that your inventory counts as nexus.

          • Michael

            You are an international seller, with no physical presence in the United States
            Congratulations! While you may have to deal with customs and import taxes, as of this writing, you do not have to collect or remit sales tax. Cheers!

            You are an international seller, who warehouses items in the U.S., such as in an FBA Warehouse
            Even though you may live outside the United States, if you sell on FBA or have established any other type of sales tax nexus in the United States (such as an office, a satellite branch of your business, or a warehouse where you store inventory), then you must comply by the sales tax laws of the state where you have nexus.

            Interesting! The above 2 points would seem to contradict each other. So a Foreigner with no physical presence in the US has no tax obligations in the US, BUT in order to sell anything you have to ship goods to some kind of warehouse such as an FBA center which qualifies as a Sales Tax “Nexus” and then you ARE required to collect and pay Sales Tax to the State where the Nexus is located.

          • taxjar

            Appove

          • The issue is not whether you need to use a 3rd party to sell in the US.

            In terms of sales tax, if you have zero presence, then you’re not obligated to collect. If you do have a presence, then you’re required to collect. And for foreign-based sellers, a very common way to gain that needed presence is through 3rd party fulfillment services.

          • Michael

            But what I’m trying to understand is – do I, as a foreigner (I live in Denmark) selling on the US Amazon.com using FBA, have to collect and pay sales tax? It would seem from the above that when I use an FBA warehouse that then I DO need to add sales tax. Am I correct in thinking that?

          • Without knowing anything about your specific business, I can say this: if you use FBA to warehouse inventory in the US, then the states in which you store that inventory would tell you that your have nexus. And nexus means you are required to comply with sales tax law.

          • Michael

            Hi Mark, thanks for the input. I am a member of a forum for Amazon sellers and I have asked this question there. A number of people, who are not US-based, and yet sell on Amazon.com through FBA have told me that they DON’T have to add Sales Tax to their sale prices. That because their companies have no “legal presence” in the US their FBA inventory is considered as “goods in transit” and they are not required to collect Sales Tax. Personally I’m just trying to find out if I do have to, or don’t have to, as I’m still unsure. Unfortunately there is not one single tax authority I can call to ask this question.

          • Stan Portigal

            The 2 points do not contradict. If you sell in the US from overseas, you do not need to use a US distribution center such as FBA because you can ship directly from overseas. Don’t confuse in-transit shipment warehoused from a warehouse used for fulfillment. They are both buildings used for storing goods, but they have different purposes.

  • I am, and my company, non resident in USA, but we intend to have products stored in a USA FBA warehouse. After reading this excellent article, I understand that the presence of my products in this Amazon facility will be a nexus. Therefore, if I am supposed to collect sales taxes, does it mean I have to contact each of the 52 (or 50 … ) american state to get a Tax Number, and then do 52 separate payments, each month, for the tax I have collected ? Sounds huge …

    • In this case you’d be responsible for only the states in which your inventory is actually warehoused (which if you’re using Amazon FBA is not every state).

  • Hi Michael,

    I have been following this string of posts and thought I would respond; first to your specific question and then about advice received on Amazon forums.

    We are a CPA firm that limits it practice strictly to state and local taxes in all 50 states, US territories and Canadian Provinces. It’s all we have done since our founding in 1992. However we are not attorneys and do not give legal advice. Having said that, we can share our knowledge of the states and the experiences of our clients. One of your first posts has to do with physical presence. Whenever we talk about physical presence, many people immediately jump to the conclusion that a brick and mortar location constitutes physical presence. While this is true, physical presence can also be much more.
    Physical presence can be created by having something you own in a state, the activities of employees in or traveling to a state and even many activities performed by third parties on your behalf. Having inventory at an FBA warehouse would fall under owning something in a state.

    When an International seller receives an order and then ships to the United States there is generally not a physical presence created as the “goods are in transit”. However when an international seller has
    inventory stored in the US for shipment, to a future customer when and if a transaction takes place, this would generally be considered storage and not goods in transit. It is what creates the nexus and the
    responsibility to collect sales tax.

    We are not the nexus police though and just because a state could assert you have nexus does not mean you should automatically register and start collecting. This becomes a business decision. When the exposure is not meaningful, many of our clients take the position that if a state finds them and assesses back taxes with penalty and interest, it would still cost less than the cost of compliance. In this situation they do not get registered.However, if the exposure is meaningful then they usually want to register and collect. The reason is that a sales tax which comes out of the customers pocket at the point of sale would later come out of your pocket plus penalty and interest if a state finds you and asserts that you should have been collecting tax.

    When it comes to the forums for Amazon sellers we suggest you filter advice very carefully. The forums are very useful for many issues and are comprised of many well intentioned individuals. However, when it comes to sales tax many of the comments are theoretical opinions based upon what individuals believe the rules are or should be. I see many references to US Supreme Court cases, the US Constitution, tax treaties and more taken out of
    the context of the whole picture. This often leads to wrong conclusions. I also read about individuals who say they have never had any problems or that no one they know of has ever had any problems. They use these statements as a further basis for their conclusions. The problem with this thinking is that no one ever has a problem until they do.

    We can share many examples where doing what you have always done or what everyone else is doing has caused tremendous issues for a company or even an industry. When a state finds one company within an industry, that is doing it wrong, they will sometimes target that industry for additional
    audits. With this in mind, we believe that if a state finds you then you should use every argument that you can think of to avoid the liability. However if
    your potential exposure is meaningful, then we suggest a plan that complies with what a state could assert. It will be a lot cheaper for you in the long
    run.

  • guest82anonymous

    ok somebody please help me, I sell digital goods (non tangible) on Etsy,I sell digital invitation templates, I customize them according to my clients request, and

    email them final files, I am not a US resident, my paypal also is non-us, I also accept my payment at a greeting card company (in CA) via paypal, there I upload my

    digital design, they print and I get my artist royalty in short I do not have any inventory in U.S , no physical products, now I was asked by paypal to provide Tax

    status, what am I suppose to choose from these two option?

    ——————————–option 1—————
    Please select this option if you’re not subject to U.S. taxation.
    This applies to a person who is not a U.S. person or entity, not a U.S. citizen, not living in the U.S., not legally a U.S. resident and/or has a non-U.S. business.

    Non-U.S. businesses generally include:

    Companies incorporated outside the U.S.
    Partnerships, trusts and estates registered outside the U.S.
    Persons or legal entities that are not subject to U.S. tax laws.

    ————option 2———–

    The owner of this account is a U.S. person or entity and subject to U.S. taxation. What’s this?Please select this option if you are subject to U.S. taxation. This

    option generally applies to a person who is a citizen or resident of the U.S. or a person who conducts a business in the U.S. It may also apply to an entity that is

    organized under U.S. law or a foreign entity that conducts a business in the U.S.Consult with a tax professional if you’re unsure whether you’re subject to U.S.

    taxation.

    Please select this option if you are subject to U.S. taxation. This option generally applies to a person who is a citizen or resident of the U.S. or a person who

    conducts a business in the U.S. It may also apply to an entity that is organized under U.S. law or a foreign entity that conducts a business in the U.S.
    Consult with a tax professional if you’re unsure whether you’re subject to U.S. taxation.

  • Nadavlun

    Hi,
    I read the following:

    “You are an international seller, who warehouses items in the U.S., such as in an FBA Warehouse
    Even though you may live outside the United States, if you sell on FBA or have established any other type of sales tax nexus in the United States (such as an office, a satellite branch of your business, or a warehouse where you store inventory), then you must comply by the sales tax laws of the state where you have nexus.”

    My question is: How do I comply by the sales tax laws? If I am located outside the US, what are the steps I need to take ? who do I need to contact? what are the costs? Do you have any useful information regarding on how actually to do it?

    • Hi. Short answer it depends on the state. They are all different. You can find a lot of helpful info about how to register for a sales tax license and what’s required here: http://www.taxjar.com/states/

  • Ben

    Hi I am currently selling health food items online to US customers. I am based in the UK. I have a partner in the US who is assisting me in shipping the items in return for a share of the profit? Do I need to pay TAX?

    • Without knowing more about your arrangement, if your partners’ presence is considered to be nexus then you would have to collect sales tax. My suggestion would be to speak with the state in which your partner is located to determine if their presence equals nexus.

  • Heath R Allison

    I am non resident just starting out with FBA can you refer me to a tax
    agent who can help with collecting tax and passing it on to the relevant
    states?

  • If you’re using FBA then you’ll have to collect the taxes yourself via the settings in Seller Central. If you need a tax professional with an expertise in ecommerce, talk to these trusted partners: http://www.taxjar.com/sales-tax-accountant-directory/

  • Ina

    Hello
    If you can help me with my case – I am an international seller, with no physical presence in the United States. Non resident, but I have a US bank account. Will I have to pay tax if I decide to recieve the payments from Amazon into my US bank account?

    • taxjar

      Hi Ina, It doesn’t sound like you will have to register for or pay sales tax. But you may have to pay income tax. I recommend you contact an accountant like Sylvia Dion who specializes in international sellers. http://www.sylviadioncpa.com/

  • Rachel

    Can I use the tax jar service if I’m an international fba seller?

  • Of course!

  • Marian

    Hi, I am a small Canadian company selling mobile Apps using Google Play Store. Do I have to collect and remit taxes for those apps sold in US?
    Google is not very explicit regarding sales taxes.

  • Malltail

    We are a US based company that forwards parcels from US retailers to Asian consumers (mainly Korea). 100% of the products that come to our facilities are outbound for overseas. Would there be a way for the Asian consumer to purchase from the US retailer (entering a PO box number for our facility at checkout), have the parcel shipped to our California facility, and avoid state sales tax from the retailer? Since the end user/ final destination is in a foreign country, and not being sold to a end user in the state of nexus. Something along the lines of partnering with a retailer that would deem our facility address as a “foreign destination” so the international buyer wouldn’t be held to paying a state tax they are not a resident of. We could provide necessary documentation to prove the orders were in fact all international orders. Thoughts?

  • Vector

    Hi! I live in Italy and I’d like to sell apps on the Google play store. Google TOS says I have to deal with taxes. If I sell them also in US, I don’t need to pay US sales taxes, right? Or something has changed since this article was written?
    Thank you very much

  • Kitson Broadhurst

    Hey Mark,

    Great informative article!

    I’m based outside the UK and looking to use a US fulfilment company to print and ship T-Shirts to my US customers. The fulfilment will be on an individual sale basis, so no storage of inventory. Does this class as having “nexus” or not?

    Regards

    Kitson

  • Hi Kitson, that’s a great question. We can’t give specific tax advice here, but Sylvia Dion of SylviaDionCPA.com is a regular contributor to our blog and an expert in international sales tax. I recommend contacting her. Good luck with your new business!

  • Hi Vector, Thanks for your question. Most of the time digital goods are not subject to sales tax. That said, every state in the U.S. is different and laws change all the time. To be safe, I suggest you contact an accountant to look into your specific situation.

  • This is a great question, but we recommend speaking to an accountant with expertise in international commerce for this one. Making a misstep here could leave you in a lot of tax trouble.

    • Malltail

      Thanks for the response and recommendation. Great article, btw. Cheers!

  • We can’t give specific tax advice, but most of the time digital goods are not taxable. That said, don’t take our word for it – it’ll settle your mind to contact an accountant or sales tax expert just to ensure you are complying. To get you started, here’s a list of sales tax experts we’ve vetted: http://www.taxjar.com/sales-tax-accountant-directory/

  • lauren

    Hi there, I have a US-corp but without nexus in any state because we have a peer-to-peer marketplace that provides services online (no shipping of physical products) and there are no employees in the US. We have sales all over the US and internationally. Do we need to submit a sales tax return in the states where our customers are? What about the international sales?

  • Hi Lauren,

    It doesn’t sound like you have sales tax nexus, but I recommend speaking with a reputable accountant for questions specific to your business. Sylvia Dion is a great one to speak to on international matters. You can find here at sylviadioncpa.com

  • John

    Hi there my name is john im looking into opening a business here at the U.S. but to export and import from other countries do you have an estimate of how much the permits & fees would riun around? Thanks

    • Hi John,

      Every situation is different, so I recommend you contact Sylvia Dion, CPA (www.sylviadioncpa.com). She is an expert in international sales tax and she can help you figure out your individual situation. Good luck with your business!

  • Albert

    Hey Mark, I’d like to ask, I’m considering the possibility of building a dropshipping business in the U.S. that ships only to locations within the U.S. I’m a non-resident alien currently living in Mexico. Do you know if I need an ITIN or EIN number to be able to purchase from suppliers and begin to sell online? Thanks.

  • Hi Albert,

    That’s out of our expertise but I do recommend you speak with Sylvia Dion (sylviadioncpa.com). She’s a sales tax CPA specializing in helping international sellers and she can get you set up. Thanks for checking out the blog!

  • J. Stroeder

    John, my request is quite blunt & simple. I (not a US citizen) reside in another country that does not have sales tax. Importation Customs duties are applied to (most) inbound items. If I purchase goods from a US based eCommerce retailer, and have the goods sent to a US based freight-forwarder, is my freight-forwarder considered a nexus in the US ? Am I going about this the best way ?

  • Zoe

    Hello & thanks for the great article! I’m the owner of a small business located in Australia, but I have made arrangements with a third party to hold my inventory & ship orders for my customers in the USA (similar to FBA but a private arrangement). Am I correct to assume in that case I would need to collect sales tax for the state which they are located in, or would I not have to worry seeing as they are not officially employed by me? Can you point me in the direction of where I might be able to get further info on any licenses I may need?

    Thanks in advance! 🙂

    • Hi Zoe,

      Most states say that you having inventory in their state means that you have nexus there. I would check with the individual state to see if that’s their rule (it usually is) but it does sound like you’d need to pay sales tax. Sylvia Dion is a great international sales tax expert should you need guidance. You can find her at sylviadioncpa.com. I hope this helps!

  • Ben

    Good day, A US citizen sold a piece of art via a registered auctioneer in Canada and auction bids closed at Brussels but the art is in the US to be delivered to the buyer outside the US . My interest is what kind of taxes I will be facing under US government? Thanks…

    • Hi Ben,

      It doesn’t sound like the seller will be charging any state sales tax, but international taxes could definitely apply. I’m sorry I can’t be more specific!

  • Natalia suárez

    Hi Mark. Thanks for this great article. What happens when you have an online platform that receives payments in he U.S. but all its operations are overseas? Do you need to pay any kind of taxes for receiving the money in a US bank although the company doesn’t have any “nexus” or inventory in the states?

  • Moises G

    Hi, as non – US resident thats trying to start selling through FBA I’m quite puzzled regarding sales taxes / income taxes and enterprise creation. Any recommendation on who might I talk to to solve these issues?

    • Hi Moises,

      We highly recommend Sylvia Dion for international sellers. You can contact her at SylviaDionCPA.com. Good luck with your business!

  • Rich

    Hi I own a company in the US and selling to a buyer from another country. Does US taxes apply for international buyers?

    • If you’re talking about sales tax, then no, because sales tax is based on the rate of the state where you’re shipping the item. Other taxes or duties may apply , though.

  • Nikki

    Hi there! Great article!! Question: my company delivers internal communication advice reports to companies. The company is located in the Netherlands and has dutch clients. A US client asks for this service as well. It’s a long term project, with many meetings conducted in the US – but no actual work is done in the US, only in the Netherlands. Do I have nexus in the US when my client is located there? Thanks!

    • Hi Nikki,

      While I can’t give one-on-one advice, from what you’ve said here it doesn’t sound like you’d fit the definition of nexus in the U.S. ( http://taxjar.wpengine.com/sales-tax-nexus-definition/) That said, it’s always a good idea to make sure you’re following other tax laws. Sylvia Dion (www.sylviadioncpa.com) is a great international CPA. If you have other tax questions, I’d definitely contact her.

  • Bryan

    I am a US citizen, but living abroad. I am starting a Drop-Shipping business. The warehouse and company I am working with is based in China. I live in Costa Rica. Do I need to collect sales tax? Do I need a license to operate this online business? Also, what happens if we move back to California?

    Thanks,
    Bryan

    • In my understand it depends on whether or not you have sales tax nexus in a state. If you have no business or location in a state then you don’t have sales tax there. That said, moving back to California would change and you would have nexus if you are selling taxable goods. Also, drop shipping and sales tax can be very complicated. I highly recommend you check out this post: http://taxjar.wpengine.com/drop-shipping-scenarios-sales-tax/ but also consult with a good sales tax CPA like international sales and use tax expert Sylvia Dion (www.sylviadioncpa.com). Your situation is complex and your items are very trackable due to customs, so you don’t want to get caught short.

  • Zaid Hashim

    Hi, I am from and reside in Sri Lanka. I plan to buy an ecommerce website (Selling apparel) which is based and registered in the United States of America. But when the Transfer happens, we expect to register the business in Sri Lanka but use a fulfilment service (Warehousing the inventory as well) in America to make it easy for shipping for any sales made by customers in America. Will I need to pay tax or sales tax in the United states for transactions?

  • Taran Kambo

    If i am a foreign company selling software via an American partner in the US am I liable for any tax, Sales Tax, Use Tax etc.?

  • Dan

    Hello, I am non US resident, I am selling on Amazon through the FBA program. How can I collect sales tax if I don’t own any legal entity?

  • Jenny Haniver

    Wondering if a foreign company set up their fulfilment/warehousing in a state that doesn’t have sales tax, could all this be avoided?

  • Lyly Bon

    Hi. I’m a Asian American. I am planning to purchased products here (from Walmart, Macy’s…) to sell to my original country in Asia. Then my friend will collect money that the customers there order through her. She will have a women in CA send it to me via bank (the women will carry that amount of money to CA, then send it to me via my bank Acc in SC. Then I will use that money to pay for the stuffs ordered by customer in My original nation and keep the rest as profit. I am concerned if I will pay sales tax or I will pay tax on the sum of money I received via my bank acc from that woman, or just on the rest money for my profit? How can I declare my tax? thanks so much. I hope I could find an answer here.

    • Hi Lyly,

      We deal more with sales tax than income tax, and it sounds like you need an income tax expert. I highly recommend Sylvia Dion http://www.sylviadioncpa.com. She specializes in international tax and may be able to help you. I also recommend this Facebook group: https://www.facebook.com/groups/International.eCommerce/ I’m sorry I can’t help you more, but good luck in your business adventure!

      • Bon

        Many thanks to u. I really appreciate it 🙂

  • RONELY CALAIRO

    Hi. We have a project in the US but the purchase order to be issued for the purchase of materials to be used in this project will be issued from our Hong Kong company, as well as the payment. Are we liable to pay the sales tax being charged to us by the vendor which is a US company? Thank you.

  • Jose Munoz

    Hello. I am an American citizen. I have been living in Japan for a long time. I sell on ebay and collect payment through paypal US. I got a letter from the IRS saying I owe a lot of money because I did not put in my taxes the money I got from third party credit card collectors. My question is: Am I liable to pay taxes on the money I received even though my business, address and everything else is in Japan? I ship directly from Japan to the customer and I don’t even owe property in the US. Please help. Thanks and Merry Christmas!

    • Hi Jose,

      This is an income tax question. I highly recommend you contact an accountant. Good luck!

  • Cristiana Paun

    Hello, I’m a Romanian Citizen that want’s to start a small handmade jewelry shop on Etsy, to sell in my spare time and slowly build a following, with no present intention of making it a full time business. I do not have a company in Romania, where I currently live, and I will not employ any storage facilities in the U.S. Could you please tell me if I have to pay any taxes to the U.S. government given these circumstances?

    • Hi There,

      We can’t advise you on income tax but as for sales tax, you only need to collect sales tax in states where you have sales tax nexus. If you don’t have any kind of presence in the U.S. then you won’t have sales tax nexus. Here’s more about nexus so you can double check: http://taxjar.wpengine.com/sales-tax-nexus-definition/

  • Phil Vallender

    Hello there,

    Thanks for writing this and many other useful articles and for taking the time to answer so many of the comments. If you have time to answer this one, I’ll be very grateful.

    I’m based in the UK and am launching a new online marketplace for digital goods. Vendors will upload their digital products to my website and earn a commission for each sale in the classic Envato, Creative Market or Etsy way.

    At the current time, do I need to collect/pay any sales tax on sales to US buyers?

    Follow on question, do my US vendors have to monitor their sales and pay tax on sales to US buyers?

    Many thanks, Phil.

    • Hi Phil,

      You have a complicated situation here. Since you’re starting a marketplace, you can choose to be the seller of record or require your sellers to collect their own sales tax. If you’re the seller of record, you could end up with quite a lot of sales tax liability. I don’t feel qualified to advise you, but I do recommend you contact international sales tax expert Sylvia Dion. Her website is http://www.sylviadioncpa.com and she’s a great one to have in your corner when doing business in the U.S. from outside the country. I hope this points you in the right direction!

  • angerguy

    Hi, im not a US citizen, and i live in a foreign country, but i do online consultation work and i have some clients in USA, they pay me in my USA bank, which i opened when i was there for a visit, do i need to create a tax id? i dont have any offices, warehouse, or products in usa. Just international services.
    I appreciate your help guys 🙂
    Thanks

    • Hey there,

      It sounds like you don’t have any type of sales tax liability. That said, you may have some type of income tax liability. That’s not our specialty, but we can recommend that you check out resources from the IRS.gov or contact a great international accountant like Sylvia Dion (www.sylviadioncpa.com.) I hope this helps. Good luck with your business!

  • Jeff

    My business is incorporated in FL. I have ware house in NY. It is for shipping address to receive from manufactur companies from different state. Then I sell the products to international consumers. I don’t sell to NY consumers at all. How’s the tax issue? I am confused.

    • Hi Jeff,

      We can’t really give you tax advice specific to your situation, but I do recommend Sylvia Dion, an international sales tax consultant. You can find her at sylviadioncpa.com.

  • Christian Bale

    Hey Mark, thanks for the article, its a very good place for me to start reading and researching. However, there are so many different types of taxes involved I’m starting to get them mixed up.

    I’m a non US Citizen (Canadian if that matters), and I sell on FBA through my company incorporated in Hong Kong. As far as taxes go, to my knowledge, I don’t have any corporate tax obligation, operating as an offshore company, I also don’t have income tax obligation, being a non US citizen. What does that leave me, only sales tax to handle?

    I’ve been selling for 3 months and haven’t done anything tax related. I assumed sales tax is collected on my behalf by Amazon, and Amazon will directly reimburse the IRS for any sales tax collected from my sales. Am I correct?

    Thanks again for a great article.

    • Hi there,

      TaxJar is handled at the state level, and states require anybody with nexus in that state to collect sale tax from buyers. Here’s more about nexus: http://taxjar.wpengine.com/sales-tax-nexus-definition/

      Since sales tax is governed at the states, the IRS (federal tax authority) isn’t involved. Also, Amazon will collect sales tax for you if you set it up, but they remit it to you and then it’s up to you to file sales tax with the states where you have nexus. This sales tax guide might help: http://www.fbasalestax.com.

      We also have a great article by Sylvia Dion (a great international CPA) about sales tax for international sellers: http://taxjar.wpengine.com/international-sellers-deal-sales-tax-u-s/

      I hope these resources point you in the right direction!

      • Christian Bale

        Ah Thank you! I signed up for Taxjar already and have some questions about how to use your service properly, who may I get in touch with for assistance?

        Thanks!

    • Igor

      Hello Christian! Can you contact me at vipseedbox@gmail.com

  • Rory Dinnigan

    Hi there. Thanks for all the information you’ve posted, it’s a great resource. I have an online direct-to-consumer bicycle business in Europe and we are planing to sell in the US. We intend to land full containers in the US and have a fulfillment company clear the container through customs, store the bicycles and then distribute the bicycles when sold by us via our website. Is this viable or should we be looking at setting up as a company in the US if we wish to land full containers, clear customs ourselves and then dispatch to the fulfillment company for distribution?

    • Hi Rory,

      Good luck in your business! That said, I’d recommend you consult with an account on this one. Sylvia Dion (www.sylviadioncpa.com) is a great one who specializes in international eCommerce.

      I can advise you on the sales tax part of this, though. If you end up with nexus in a state (i.e. most U.S. states consider you to have nexus if you store inventory in that state) then you’d need to register for a sales tax permit and collect sales tax from buyers in that state. If I’m reading you correctly, it looks like you’ll have to deal with sales tax in the states where either you or your fulfillment service stores your bicycles for fulfillment.

      Be sure to share the link to your store when you go live in the U.S. We have a couple avid cyclists here at TaxJar!

  • Rory Dinnigan

    Hi there. Thanks for all the information you’ve posted, it’s a great resource. I have an online direct-to-consumer bicycle business in Europe and we are planing to sell in the US. We intend to land full containers in the US and have a fulfillment company clear the container through customs, store the bicycles and then distribute the bicycles when sold by us via our website. Is this viable or should we be looking at setting up as a company in the US if we wish to land full containers, clear customs ourselves and then dispatch to the fulfillment company for distribution?

  • Tammy

    If a company is in the US and sell to an international company that have no physical presence in the US, are they responsible for sale tax?

    • With sales tax, you charge sales tax based on the rate at the buyer’s location. If you’re shipping out of the country, there would be no U.S. sales tax. There may be other things like customs duties, etc.

    • With sales tax, you charge sales tax based on the rate at the buyer’s location. If you’re shipping out of the country, there would be no U.S. sales tax. There may be other things like customs duties, etc.

  • Tammy

    If a company is in the US and sell to an international company that have no physical presence in the US, are they responsible for sale tax?

  • ferreo33

    Hi, I’m a non-resident and my company is located outside of the USA. My country, to my knowledge, does not have a tax treaty with the USA. We provide a dinner-show service. Anyway, we use 2checkout to process our online payments and we also let Viator sell them on our behalf for a comission. Both of these companies then proceed to foward the corresponding payments as international wire transfers originating from their offices on the USA. I understand that I should not be paying any tax to the USA. However when filling up the W8-BEN form it says that “Partnerships” may not be exempted from US tax (our company in our country is like a LLC, which I would say is a partnership) and since we wouldn’t qualify on a tax treaty I do not understand if we need to pay US tax or not and if in this form is enough to state we are a partnership and skip completion of part 2. Pretty much I would love to know how to fill this form and not making a mistake that will make me pay taxes that I shouldn’t.

    • Hi There,

      This seems like an income tax question and we focus on U.S. sales tax. I can recommend a great international accountant, Sylvia Dion. You can find her at her website http://www.sylviadioncpa.com. I hope this helps!

    • Hi There,

      This seems like an income tax question and we focus on U.S. sales tax. I can recommend a great international accountant, Sylvia Dion. You can find her at her website http://www.sylviadioncpa.com. I hope this helps!

  • ferreo33

    Hi, I’m a non-resident and my company is located outside of the USA. My country, to my knowledge, does not have a tax treaty with the USA. We provide a dinner-show service. Anyway, we use 2checkout to process our online payments and we also let Viator sell them on our behalf for a comission. Both of these companies then proceed to foward the corresponding payments as international wire transfers originating from their offices on the USA. I understand that I should not be paying any tax to the USA. However when filling up the W8-BEN form it says that “Partnerships” may not be exempted from US tax (our company in our country is like a LLC, which I would say is a partnership) and since we wouldn’t qualify on a tax treaty I do not understand if we need to pay US tax or not and if in this form is enough to state we are a partnership and skip completion of part 2. Pretty much I would love to know how to fill this form and not making a mistake that will make me pay taxes that I shouldn’t.

  • Bonnie Shanas

    HI,
    I’ve seen several questions about selling to a buyer abroad which are exempt from sales tax. My question – if the buyer buys the merchandise in person (an artwork during a family trip) but is arranging for his own shipment abroad/taking the artwork with him personally, do I still charge him sales tax?

    • Hi Bonnie,

      The general rule of thumb is that sales tax is charged at the point of sale. For online orders, the point of sale is where the item is delivered. But in this case, I’m not 100% certain since the buyer is paying you in person. This is one of those tricky little esoteric bits of sales tax law that states are likely to treat differently from state to state. I suggest giving your state’s department of revenue a call and asking their opinion. Here’s a list of their phone numbers: https://blog.taxjar.com/state-sales-tax-phone-numbers/

  • Alex Fanuele

    I am a manufacturer based in California, I have a client who has their warehouse and distribution center located in California as well so we are required to collect sale tax. HOWEVER They are only selling and shipping overseas to Korea and are claiming they are not required to pay Sales Tax on the product they are buying from me. My Questions is, is this true and if so what documentation do I need to collect from them in order to protect myself down the line in case of an audit etc. Thanks!

  • Merchant Merchant

    Hi, I am international seller I don’t live in the U.S and I want to use drop shipping. do I have to obtain sales tax ID ? thanks

  • DAN

    Hello, our company located in Europe (no US presence). We are buying helmets from Ohio company and ship to Florida customer and issue electronically invoice to him. Do we have to pay any taxes, if our company has no presence in US, Ohio supplier has no nexus in Florida?

  • Ronnie Master Coach

    Hi There, am not a US citizen and do not live in the US. I have a US bank account though. I need to know what taxes i need to pay if i sell products online on my US bank account via paypal? Is there a tax advisor or person one can recommend to get information? thanks and regards

    • Hi Ronnie,

      We recommend Sylvia Dion. Her website is sylviadioncpa.com and she specializes in international taxes. I hope this helps!

  • Patrick Sanders

    I am a business in Alabama who buys & ships products to my customer in China. Do I have any state sales tax obligations?

    • Hi Patrick,

      You only have to charge U.S. sales tax to buyers in states where you have sales tax nexus. So while you may have other tax obligations selling to China, you wouldn’t have to worry about charging U.S. sales tax to buyers there. I hope this clarifies!

  • ct

    Hi. I am a newbie. I would like to sell on Amazon. I am non-american and non US resident. I plan to ship my items to the US to a prep service company that has no tax like montana. Does it mean that i dont have to bother with collecting or remiting any sales tax? Thank you

    • Hi CT,

      you only need to collect sales tax in U.S. states where you have sales tax nexus. In this case, it doesn’t sound like you’d have nexus. (Also, prep centers don’t create sales tax nexus anyway.) If you want to consult with a CPA, I recommend this company: http://peisnerjohnson.com/

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