Sales Tax Nexus for a Foreign-Owned LLC Selling in the US
US sales tax is a state-by-state nexus question, not a federal one. How economic nexus, warehouses, and marketplace laws affect a foreign-owned LLC.
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Last updated September 17, 2026
US sales tax is imposed by individual states, not the federal government, so there is no single national rule. Since South Dakota v. Wayfair (2018), a state can require an out-of-state seller to collect its sales tax once the seller crosses that state's own economic-nexus threshold, and marketplace facilitator laws usually shift collection to platforms like Amazon or Etsy instead of the seller.
A foreign-owned LLC selling into the United States runs into sales tax the moment it asks "do I need to register somewhere?" — and finds fifty-plus different answers, because each state sets its own rules. That is unlike Form 5472, which is one federal form with one nationwide threshold and no state equivalent to compare it to.
This guide separates the sales tax question from the federal question, explains where economic nexus and physical nexus come from, and shows how marketplace sales differ from a seller's own website. On 21 June 2018, the Supreme Court decided South Dakota v. Wayfair, Inc., holding that the physical-presence rule from Quill Corp. v. North Dakota was "unsound and incorrect" and overruling it — the decision that made economic nexus possible nationwide (source: the Wayfair opinion on supremecourt.gov). If your LLC also has an outstanding federal Form 5472 to prepare, start that filing while you work through sales tax separately.
What is sales tax nexus, and why does it matter for a foreign-owned LLC?
Nexus is the legal connection between a seller and a state that is strong enough for that state to require registering, collecting its sales tax, and remitting it. Before 2018, nexus meant physical presence — an office, employees, or inventory in the state. A foreign-owned LLC with no US staff and a Wyoming or Delaware mailing address could sell into every state and, in most cases, owe no collection duty anywhere, because it had no physical footprint.
Economic nexus changed that by measuring sales activity instead. A foreign-owned LLC now checks two separate questions for every state it sells into: is there a physical connection there, and does it exceed that state's own economic-nexus threshold. Either one can create a collection obligation on its own.
What did South Dakota v. Wayfair actually decide?
The Court held that requiring physical presence before a state could make an out-of-state seller collect its sales tax was no longer good law. South Dakota's own statute — the one under review — applied to sellers that, annually, delivered more than $100,000 of goods or services into the state or engaged in 200 or more separate transactions there (source: supremecourt.gov). The Court did not write a national threshold; it ruled a threshold like South Dakota's could satisfy the Commerce Clause and left every state free to write its own.
That is the consequence that matters most here: Wayfair created the legal room for economic nexus, but each state legislature picked its own number, measurement period, and whether to count transactions as well as dollars.
What are the actual economic-nexus thresholds?
Thresholds differ by state and change over time, so treat any number you read — including the ones below — as a starting point to confirm on the state's own Department of Revenue site before relying on it.
Two examples, verified directly against state sources for this guide:
- South Dakota currently requires a remote seller to register once its gross revenue from sales into the state exceeds $100,000 in the current or prior calendar year; the state's page no longer lists a separate transaction-count threshold (source: South Dakota Department of Revenue).
- California requires an out-of-state retailer to register and collect use tax once combined sales of tangible personal property for delivery into California, by the retailer and related persons, exceed $500,000 in the current or prior calendar year (source: CDTFA).
Beyond those two, the honest answer is that the threshold varies by state, and some states also apply a separate transaction-count test. Check the Department of Revenue site for every state where the LLC has meaningful sales volume rather than assuming one state's number applies elsewhere.
Can storing inventory in a US warehouse create nexus by itself?
Yes, storing inventory in a state's warehouse can create nexus there, independent of sales volume, because it is a physical presence rather than an economic one. California's tax agency states plainly that a seller located outside California that stores inventory in a California fulfillment center is considered engaged in business there and must register, file returns, and pay tax on sales to California consumers (source: CDTFA — Fulfillment Centers). That is a state-specific rule, not a universal one — other states set their own tests, and some extend relief to sellers whose only in-state connection is inventory placed there by a marketplace facilitator.
This is why Amazon FBA sits in a different category from a Shopify store shipping from abroad. FBA inventory gets warehoused wherever Amazon's network decides, often across a dozen states at once, so FBA sellers frequently find physical nexus in states they never chose — see Form 5472 for Amazon FBA sellers for that same LLC's federal reporting.
Who actually collects the tax — the marketplace or the seller?
Most states with a sales tax also have a marketplace facilitator law, shifting the collection duty to the platform for sales made through it. Amazon, Etsy, and similar marketplaces generally calculate, collect, and remit tax on the orders they process, so a seller isn't separately collecting on those transactions. A seller's own website — a Shopify store, for example — is not a marketplace, so the LLC itself carries the nexus, registration, and remittance job on those direct sales.
| Where you sell | Who usually collects | What you must still check |
|---|---|---|
| Amazon (FBA or FBM) | Amazon, as marketplace facilitator | Whether FBA inventory storage creates physical nexus in additional states |
| Etsy | Etsy, as marketplace facilitator | Whether print-on-demand or handmade supply chains add a second location |
| Own Shopify store | The LLC itself | Economic-nexus thresholds in every state with meaningful direct sales |
| Wholesale / resale buyers | Usually neither, if a valid resale certificate is on file | Whether the certificate is current and covers that state |
The table is a starting point for sorting activity by channel, not a final determination — a state can still expect the seller to register even when a marketplace collects on some of its sales, particularly once the seller's own direct sales cross that state's threshold.
Does sales tax nexus affect the LLC's Form 5472 filing?
No. Sales tax and Form 5472 are unrelated obligations that happen to apply to the same LLC. Form 5472 is a federal information return under IRC §6038A(d) reporting transactions between the LLC and its foreign owner — contributions, distributions, loans — regardless of state sales activity, and it carries a $25,000 penalty per form per year if missing or substantially incomplete. Sales tax registration, collection, and remittance are state matters that never touch that federal form.
| Sales tax | Form 5472 | |
|---|---|---|
| Who imposes it | Each state, individually | The federal government (IRS) |
| What triggers it | Economic or physical nexus in a state | Any reportable transaction with the foreign owner |
| Who collects/files | The seller or the marketplace | The LLC, once per year |
| Penalty for missing it | Varies by state | $25,000 per form, per year |
An LLC can owe sales tax in a dozen states, none of them, or anywhere in between, and its Form 5472 obligation is completely unaffected either way.
Is sales tax different for digital products or SaaS?
Whether a digital product or SaaS subscription is taxable at all varies by state — some tax software and digital goods like physical products, some tax only certain categories, some tax none of it. There is no general rule beyond that variation, so a foreign-owned LLC selling digital products needs each state's own Department of Revenue guidance on digital goods, not the physical-goods rules above.
What should a foreign-owned LLC actually do about sales tax?
- List every state where the LLC has direct sales through its own website or store, separate from marketplace sales.
- List every state where the LLC's inventory is physically stored, including every Amazon fulfillment center location shown in seller reports.
- For each state on either list, check that state's Department of Revenue page for its current economic-nexus threshold and its physical-presence rules.
- Confirm which of the LLC's sales channels are marketplace facilitator sales already being collected on the seller's behalf.
- Register only in states where a threshold has actually been exceeded or a physical-presence test is met — registering everywhere "to be safe" creates filing obligations the LLC did not need.
- Repeat the review at least annually, since thresholds, transaction volume, and warehouse locations all change.
Four scenarios, worked through
An Amazon FBA seller with inventory in several US fulfillment centers. Amazon collects and remits on its own orders as marketplace facilitator. The open question is physical nexus: FBA inventory can sit in states the seller never chose, and some treat that stored inventory as a taxable presence in its own right. Check the states where inventory reports actually show stock.
A Shopify store shipping orders from abroad. No marketplace facilitator collects on the LLC's behalf, so the LLC itself carries the analysis for every state it ships into. Economic-nexus thresholds apply directly to its own sales, state by state, so the LLC needs to track cumulative sales to know when a threshold is crossed.
An Etsy or print-on-demand seller. Etsy generally collects and remits as marketplace facilitator on its own platform. A POD supplier shipping directly to the customer doesn't change who collects on the Etsy sale, but a seller who also fulfills orders outside Etsy, or stores inventory with a POD partner, should check that arrangement separately.
A SaaS or digital-product seller with no inventory anywhere. With no physical presence to analyze, the question narrows to economic nexus and to whether that state taxes digital products at all — a determination that varies by state and gets checked one state at a time, not assumed.
Does Form5472 Prep handle sales tax registration?
No. Form5472 Prep prepares and faxes the annual federal Form 5472 and pro forma Form 1120 for a foreign-owned US disregarded entity — standard filing is $149 (5–7 business days), express is $199 (3 business days), and each additional past tax year is +$99. We also offer an EIN service at /ein for $149 and an ITIN service at /itin for $349. We do not register LLCs for sales tax, collect or remit sales tax on a client's behalf, act as a registered agent, draft operating agreements, or file state annual reports. We are not a law firm or a CPA firm and do not give legal or tax advice — a state-by-state sales tax nexus determination should go to a state tax professional or a sales tax compliance service.
Frequently asked questions
Does a foreign-owned LLC have to collect sales tax everywhere it ships?
No. A state can only require collection once the LLC has nexus there — either physical presence, such as stored inventory, or economic nexus once sales into that state cross its own threshold. Selling into a state alone does not automatically create an obligation.
Is there one federal sales tax threshold like there is for Form 5472?
No. Sales tax has no federal component at all; it is imposed separately by each state, each with its own threshold, rate, and rules. Form 5472's $25,000 federal penalty and its trigger are entirely unrelated to any state's sales tax rules.
Does Amazon collecting sales tax mean the LLC has no sales tax obligations?
Not necessarily. Amazon generally collects on the orders it processes as marketplace facilitator, but stored FBA inventory can still create physical nexus in a state on its own, separate from who collects tax on the marketplace sale itself.
Do I need a US Social Security Number to register for a state sales tax permit?
Requirements vary by state and are outside the scope of the federal Form 5472 process; check the specific state Department of Revenue's registration instructions, since some states have separate procedures for entities without a US-resident owner.
Does paying sales tax mean the LLC owes US federal income tax?
No. Sales tax is a state transaction tax collected from customers and remitted to the state; it has no bearing on whether the LLC's foreign owner owes US federal income tax, which depends on effectively connected income or US-source income instead.
Is digital product or SaaS sales tax the same in every state?
No. Whether digital goods or software subscriptions are taxable varies by state, with no uniform national rule, so each state's guidance needs to be checked individually for that specific product type.
Sales tax nexus is a state-by-state question that runs on its own timeline, separate from the LLC's annual federal Form 5472 filing. Start your Form 5472 filing if that federal piece is still outstanding, or read what Form 5472 is and who must file for the federal side in full.