QUICK ANSWER
A Canadian seller has to register and collect US sales tax in any state where it crosses that state’s economic nexus threshold. Most states set the threshold at USD 100,000 of sales into the state in a year. California, New York and Texas sit at USD 500,000, and Alabama and Mississippi at USD 250,000. The obligation starts when you cross, not when you notice, and the uncollected tax remains owed by the seller.
Do I have to collect US sales tax if my business is in Canada?
Yes, in any state where you cross that state’s threshold. Physical presence stopped being the test in 2018. What matters now is how much you sell into a state, and a seller shipping from Vancouver into Ohio is treated the same way as a seller shipping from Columbus.
This catches Canadian sellers more often than American ones, for a reason that has nothing to do with sophistication. A US seller crosses a threshold in a neighbouring state early and learns the rules while the numbers are small. A Canadian seller grows across the whole country at once, through a Shopify store and a marketplace listing, and crosses four or five thresholds in the same quarter without anything on the dashboard changing colour.
Where does economic nexus actually start?
Three tiers cover most of the country, and the figures below were confirmed on 12 October 2026 against a state-by-state reference last updated 26 September 2026. Thresholds move, so confirm the specific states that matter to you before you register anywhere.
- USD 100,000 of sales into the state in the current or previous calendar year. This is the common figure and it applies in most states.
- USD 500,000 in California, New York and Texas. New York also requires more than 100 separate sales before the obligation attaches.
- USD 250,000 in Alabama and Mississippi.
Seventeen states still run a transaction count alongside the dollar figure, usually 200 sales, and in most of those either test is enough on its own. That is the part that surprises people, because 200 orders of a 40 dollar product is 8,000 dollars of revenue and a registration obligation. The count test is being withdrawn state by state. Illinois dropped it on 1 January 2026 and Kentucky on 1 August 2026, which is useful but also means any list more than a few months old is wrong somewhere.
Amazon collects the tax for me. Am I covered?
Partly, and the gap is where the money usually is. Marketplace facilitator rules make Amazon responsible for collecting and remitting on sales made through Amazon in most states. Your direct Shopify sales into those same states are still yours to handle. A seller running both channels often assumes the marketplace solved the problem for all of it.
There is a second detail that works against you. In several states the marketplace volume still counts toward the threshold that decides whether you have to register at all, even though the marketplace remits the tax on its own portion. So the Amazon sales can push you over the line, and then the Shopify sales on the other side of that line are the ones you are liable for.
What happens if I crossed a threshold months ago and did nothing?
The tax is still owed, and you cannot go back to a customer from last November and ask them for it. It comes out of margin you have already booked and spent. That is the whole argument for checking in October rather than in February.
For a seller who has never registered in a state, the period the state can look back over is often open ended. A voluntary disclosure agreement usually caps that lookback at three or four years and waives penalties, but it is only available while you are the one making the approach. Once the state contacts you, that option is gone. The arithmetic is unforgiving and it is also simple: the cost of dealing with this is lowest today and rises every month.
We should be straight about what the published guidance can and cannot tell you. State rules differ on what counts toward a threshold, whether exempt and wholesale sales are included, and how the measurement period is defined. Those differences decide the answer in borderline cases, and no general article resolves them. What a general article can do is tell you whether you are anywhere near a line, which is the question most sellers have never actually asked.
How do I check this before the Black Friday weekend?
Pull your 2026 sales by ship-to state, across every channel, and sort them. You are looking for states above 100,000 US dollars, states above 250,000 or 500,000 if they are on the shorter list, and any state where your order count is near 200. Most sellers find the exercise takes an afternoon and produces a shorter list than they feared, with one or two entries they did not expect.
Do it before the weekend of 27 to 30 November rather than after. Peak season is when a borderline state becomes a registered state, and the difference between finding that out in October and finding it out in January is whether you had the option to collect the tax from the customer in the first place.
If the exercise does turn something up, registering is usually the smaller half of the job. The larger half is deciding how far back the position goes and whether a voluntary disclosure is the right route, which depends on how long you have been over the line and how much is involved. That is a conversation to have with the numbers in front of you rather than a decision to make from a general article, and it is considerably easier to have in October than during the week the state writes to you.
Frequently asked questions
Do I need to register in every US state?
No. Registration follows the threshold, state by state. Most Canadian sellers who check find they have crossed in a small number of states and are nowhere near the line in the rest.
Does Shopify collect US sales tax for me?
Shopify can calculate and collect it once you tell it where you are registered, but it does not decide where you are registered and it does not file the returns. The registration decision is yours.
Is a Canadian seller treated differently from a US seller?
No. Economic nexus is based on sales into the state, not on where the business is located. A Canadian seller crossing a threshold has the same obligation as a domestic one.
What does Transcounts actually do about this?
We map your exposure by state across both channels, tell you which states need attention and which do not, and document the position so it can be acted on. The mapping is part of the $99 Ecommerce Diagnostic.
NEXT STEP
Transcounts closes the books for Canadian Shopify and Amazon sellers and ties payouts to cash with a 99.7% zero variance rate on A2X reconciliations. The $99 Ecommerce Diagnostic includes a cross-border exposure map by state, delivered as a written report, and the fee is credited against onboarding if you go ahead.
