Sales Tax Nexus When You Sell From Abroad

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$100,000 of sales into one state can force you to collect that state's sales tax, and Illinois will assess undetermined destination sales at 15% when the ship-to location is missing. As of September 2026, a mailing address in Lisbon, Medellín, or Chiang Mai does not erase those rules. The duty follows the customer's state, not your kitchen table.

This is a cash-flow leak, not a paperwork hobby. Tax you were supposed to collect and did not collect usually comes out of your margin later, with penalties on top. The Expat Tax & Finance cluster covers income-tax filings. Sales tax is a separate bill, and it can hit a solo seller long before any income-tax exclusion feels generous.

The primary reader here is an operator invoicing US customers while living abroad: a product seller, a software seller, or a service business with repeat US buyers. Beginners get a short starter path. Families and retirees who only spend money abroad, and never sell into a state, can stop after the first section.

Does living abroad cancel US sales tax?

No. Leaving the United States does not cancel a state's right to require sales-tax collection on sales delivered into that state once you cross its economic-nexus line. Your foreign lease, your visa, and your time zone are irrelevant to that test.

Income tax is a different bill

US citizens still report worldwide income to the IRS. As of the IRS page on figuring the foreign earned income exclusion, the maximum exclusion is $130,000 for tax year 2025 and $132,900 per qualifying person for tax year 2026. That exclusion can shrink federal income tax on foreign earned income. It does not register you for a state sales-tax permit, and it does not pay a state's use tax.

Self-employment tax is yet another layer. A profitable Schedule C can still owe Social Security and Medicare tax after the exclusion. Read the self-employment tax trap for freelancers abroad before you treat a low federal income-tax bill as a clean year. Sales tax sits beside both of those, not inside them.

What is economic nexus after Wayfair?

Economic nexus means a state can require an out-of-state seller to collect tax because of sales volume, even with no office, warehouse, or employee in that state. The Supreme Court allowed that approach in South Dakota v. Wayfair, decided June 21, 2018.

What the Court actually reviewed

The Court overruled the physical-presence rule from Quill and National Bellas Hess. The South Dakota statute it reviewed applied to sellers that, on an annual basis, delivered more than $100,000 of goods or services into the state or engaged in 200 or more separate transactions for delivery into the state. The opinion also records the state's estimate that the old rule cost South Dakota $48 million to $58 million a year. That 2018 statute is the template many states copied. It is not a promise that every state still uses both a dollar test and a 200-sale test.

Physical presence still matters, and it is often stricter than the economic test. Inventory in a fulfillment warehouse, a salesperson, or a store makes you "in" that state under older rules. Texas, for example, says a seller with a business location or representative in Texas is not a remote seller at all. Economic nexus is the rule for people whose only contact is remote solicitation: a website, a phone call, a catalog, or an invoice emailed from abroad.

Which state dollar tests should you track?

There is no single national threshold. As of September 2026, a seller can be under the line in California and over it in Washington on the same revenue. Track the customer's state, the kind of receipt, and the lookback window that state uses.

State	Line, as of September 2026	What the state counts	Practical timing
California	More than $500,000	Tangible personal property delivered in California, including nontaxable sales such as sales for resale. Related persons under IRC section 267(b) are combined. Current or preceding calendar year.	Register and collect once the combined total exceeds $500,000. The rule expressly covers retailers outside the United States.
New York	More than $500,000 and more than 100 sales	Both tests are required, and both are measured on tangible personal property delivered in the state. Lookback is the immediately preceding four sales-tax quarters.	Those quarters are March 1–May 31, June 1–August 31, September 1–November 30, and December 1–February 28/29. Crossing only one test is not enough.
Texas	Safe harbor under $500,000	Gross revenue from taxable and nontaxable tangible property and services, plus separately stated handling, transportation, installation, and similar fees. Sales for resale and sales to exempt entities count.	After you cross the line, obtain a permit and start collecting no later than the first day of the fourth month after the month you exceeded it. Remote sellers outside the US can file the application by email.
Washington	More than $100,000	Combined gross receipts sourced to Washington in the current or prior year, including retail, wholesale, services, exempt sales, and marketplace sales.	Registration covers retail sales tax and the state's business-and-occupation tax. A facilitator may collect the sales tax, and you can still have a filing duty.
Illinois	$100,000 or more of tangible-goods receipts	Cumulative gross receipts from sales of tangible personal property to Illinois purchasers. The 200-transaction alternative ended January 1, 2026.	Recheck on the quarters ending in March, June, September, and December, using the preceding 12 months. Missing destination detail can be assessed at 15%.
Oregon	No general sales tax	Oregon does not levy a general sales or use tax. A vehicle use tax is a separate, narrow rule.	Oregon's own page tells Oregon businesses that Wayfair still makes them collect tax for other states when those states' rules apply. A foreign address works the same way.

Data note: thresholds were checked in September 2026 against California, New York, Texas, Washington, Illinois, and Oregon revenue pages. Other states set their own lines, and several have repealed transaction-count tests. Do not copy one state's number onto another.

How the outliers change the decision

California's remote-seller rule is in Revenue and Taxation Code section 6203, amended by Assembly Bill 147. The collection requirement for remote sellers applies to taxable sales of tangible personal property on and after April 1, 2019. The $500,000 test includes nontaxable tangible sales, so a large wholesale or resale book can trip registration even when many invoices were not taxed. A spouse's or other related seller's California deliveries are added to yours.

New York's rule is on the Department of Taxation and Finance nexus page. The dollar amount was raised from $300,000 to $500,000 by a June 24, 2019 amendment, retroactive to June 21, 2018. You need both the dollar test and the 100-sale test. A single $600,000 equipment sale does not, by itself, meet the published remote-seller test, because that is one transaction. A hundred small shipments that total $400,000 also miss it, because the dollars are short.

Texas publishes the safe harbor on the Comptroller's remote-seller page. The state's own example: revenue over the line for July 1, 2021 through June 30, 2022 meant a permit by October 1, 2022. Remote sellers may elect a single local use tax rate, currently 1.75%, instead of looking up each destination rate. That election is not available to marketplace providers collecting for their sellers. Separately, a foreign taxable entity with $500,000 or more of annual gross receipts from business in Texas can have franchise-tax nexus even with no physical presence, for reports due on or after January 1, 2020. That franchise tax is not the sales tax. Operators with a US entity should track both.

Washington's remote-seller page sets the receipts line at more than $100,000 of combined gross income sourced to the state in the current or prior year, effective January 1, 2020. Services count. Exempt sales count toward the threshold even when they are not taxed. Illinois states the post-2025 rule in FY 2026-12: on or after January 1, 2026, the only remote-retailer threshold for tangible personal property is $100,000 or more of cumulative gross receipts to Illinois purchasers. Illinois destination-based guidance adds a sharp operational penalty: if you cannot show the proper location, the department can assess those gross receipts at 15%.

Do service invoices count toward the threshold?

Sometimes. States do not share one definition of a taxable sale, and the threshold math is not always the same as the taxability math. Count the receipts the state tells you to count, then ask a second question: is this particular sale inside the tax base?

Starter path for a service seller

If you sell only your own labor, with no shipped goods and no software license, start with the states that openly count service receipts. Texas includes services in the $500,000 gross-revenue figure whether or not the service is taxable. Washington includes "service and other activities" in the $100,000 gross-receipts figure. California and New York, on the pages cited above, measure the remote-seller threshold on tangible personal property. A pure service practice can be under those two tangible-goods tests and still be over Texas or Washington.

That is not a ruling that your service is untaxed everywhere. Some states tax data processing, specified digital products, or software accessed remotely. New York's marketplace guidance treats prewritten computer software that is downloaded or remotely accessed as tangible personal property for marketplace collection. If you sell a template, a downloadable file, or hosted software, do not assume you are "only a service."

Operator path for repeat US buyers

Operators should keep a rolling worksheet with one row per state and four columns: tangible goods, software or digital products, services, and marketplace-facilitated sales. Update it when a quarter closes, not when a customer complains. The offshore company tax trap is a different problem, about how the IRS sees a foreign entity. A foreign company does not opt you out of state collection on US deliveries.

What if a marketplace already collects the tax?

A marketplace collection certificate removes the collection job on those facilitated sales. It does not always remove the sales from the threshold, and it does not cover invoices you send yourself.

Direct sales still need a permit

Texas says a remote seller who only sells through a marketplace provider that certifies collection does not have to hold a Texas permit, and must keep marketplace records for at least four years. The Comptroller's remote-seller and marketplace FAQ also says that, as of April 1, 2020, marketplace sales are included in the safe-harbor math. In the FAQ's example, $300,000 through your own site plus $300,000 through marketplaces is $600,000, so you are outside the safe harbor and you collect on the website sales. The marketplaces still collect on the sales they facilitate.

Washington uses the same split. You include facilitated sales when you test the $100,000 receipts line. If the facilitator collects retail sales tax, you deduct those facilitated sales on the return, and you can still be filing because the receipts threshold was met. Keep the facilitator's certificate with the invoices. "The platform handles tax" is true only for the orders the platform actually processed.

European VAT on digital services is a third system, with its own registration thresholds. If you also sell downloads to EU customers, use the EU VAT guide for US businesses beside this one. Do not net EU VAT against a US state's sales tax.

Checklist before you invoice the next US customer

Run this sequence before a new product line or a busy quarter, and again at each state's lookback date. A one-time cleanup beats a year of uncollected tax.

1. Export the last 12 months of US receipts with the customer's state, or the ship-to state if goods moved.
2. Split each dollar into goods, software or digital products, services, and marketplace orders.
3. Test California and New York on tangible property only, using their calendar and quarter rules, and apply New York's 100-sale test as a second gate.
4. Test Texas on goods plus services plus shipping and similar fees, against the under-$500,000 safe harbor and the fourth-month start date.
5. Test Washington on all gross receipts sourced there, including services and marketplace sales, against more than $100,000 in the current or prior year.
6. Test Illinois tangible-goods receipts against $100,000 on the March, June, September, and December lookbacks. Refuse to invoice an Illinois shipment that has no deliver-to location.
7. If you only use a marketplace, file the collection certificate and still ask whether that state counts those sales toward the threshold.
8. If you cross a line, register before the state's start date. Texas lets sellers outside the United States submit the permit application by email. Other states have their own portals.
9. Park tax you collect in a separate operating account, such as a Mercury Bank checking account, so it is not spent as if it were revenue.
10. File the federal income-tax return on the same activity. Sales-tax registration does not replace Form 1040, and the exclusion does not replace the state permit.

To test demand before a US offer gets big enough to cross a state line, post it as a free listing on Brixaz and see who responds. Listings are free, and a quiet listing is a cheaper lesson than an accidental $100,000 quarter in one state.

Data notes / Sources checked

Figures below were read in September 2026. States amend thresholds, repeal transaction counts, and change local rates. Re-read the state page in the quarter you cross a line.

• South Dakota v. Wayfair, decided June 21, 2018, including the South Dakota statute's more-than-$100,000 or 200-transaction scope.
• California CDTFA, Wayfair and remote sellers, RTC section 6203, more than $500,000 of tangible personal property, including sellers outside the United States.
• New York Tax Department, registration with no physical presence, more than $500,000 and more than 100 tangible-property sales in the prior four sales-tax quarters.
• Texas Comptroller, remote sellers, under-$500,000 safe harbor, fourth-month start, 1.75% single local use tax rate, and franchise-tax economic nexus.
• Texas Comptroller marketplace FAQ, marketplace sales included in the safe-harbor total.
• Washington Department of Revenue, remote sellers, more than $100,000 of combined gross receipts.
• Illinois FY 2026-12, transaction test removed January 1, 2026, leaving $100,000 of tangible-goods receipts.
• Illinois destination-based sales tax assistance, 15% assessment when the location cannot be determined.
• Oregon Department of Revenue, sales tax in Oregon, no general sales tax, and a warning that sellers still collect for other states.
• IRS, figuring the foreign earned income exclusion, $130,000 for 2025 and $132,900 for 2026.

Conclusion

Sell into a state from abroad and you inherit that state's math. As of September 2026, California and New York draw a high tangible-goods line at more than $500,000, New York also requires more than 100 sales, Texas counts services toward a $500,000 safe harbor, and Washington and Illinois can bite at $100,000. Illinois adds a 15% assessment when the destination is missing. The 2026 foreign earned income exclusion of $132,900 does not pay any of those bills.

Keep the worksheet by state, separate the tax you collect from the money you can spend, and re-check the lookback on the calendar the state actually uses. A quiet quarter under the line is a fine result. An untracked quarter over the line is a margin problem you chose not to see.