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E-commerce guide · 2026
US sales tax for Canadian sellers: nexus, FBA inventory and what Amazon covers.
You can owe US sales tax without ever setting foot in the country. Two things create it — enough sales into a state, or inventory sitting in one — and Amazon collecting on your marketplace orders does not make either of them go away.
Economic nexus
Selling enough into a state is enough.
Since South Dakota v. Wayfair in 2018, a state can require a seller with no physical presence to register and collect, purely on the volume of sales into it. Nearly every sales-tax state now does.
The thresholds are not uniform, and the trend through 2025 and 2026 has been to drop the transaction-count test and keep the dollar one:
| State | Threshold |
|---|---|
| California | $500,000 — no transaction count |
| Texas | $500,000 in the preceding twelve months — no transaction count |
| Washington | $100,000 gross, current or prior year — transaction count removed in 2019 |
| Illinois | $100,000 — transaction count removed January 1, 2026 |
| Virginia | $100,000 or 200 transactions — still has the count |
Those five are illustrations, not a list. Every state sets its own figure and its own measuring period, and the answer for your business depends on where your orders actually went.
The short version
Marketplace orders: in states with marketplace facilitator laws — which is effectively all of them — Amazon, Etsy and eBay collect and remit the sales tax on their own platform's orders.
Your own store: nobody collects for you. This is where the real exposure sits for a seller who runs Shopify alongside Amazon.
Registration: can survive either way. A state may still want you registered and filing returns even when the marketplace is the one remitting.
What we do
We work out where your sales and your inventory have crossed a line, register you there, set the rates and product taxability up in your store, and file the returns on each state's schedule.
Physical presence
FBA inventory, and why the answer is state by state.
When you send stock to Amazon, it moves it where it wants. A pallet can end up in four states you have never sold to. Whether that alone creates nexus is genuinely contested, and the honest answer is that it depends which state.
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Washington: yes, explicitly
Washington states that holding a stock of goods in the state — including inventory held by a marketplace facilitator — creates physical presence nexus. There is no ambiguity to work with.
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California: inventory is physical presence
California lists maintaining inventory in the state as physical presence, and a retailer with physical presence is generally required to be registered regardless of the $500,000 economic threshold.
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Texas: it costs you the safe harbour
A seller whose only Texas activity is remote solicitation is a "remote seller" and gets the $500,000 threshold. Any physical presence in Texas takes you out of that definition, and the threshold with it.
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Illinois: the counter-example that matters
Illinois says inventory used to fulfil marketplace sales, where the seller is not responsible for the tax, does not create physical presence — but if that same inventory also fills orders from your own store, it does. An Amazon-only seller is outside it; an Amazon-plus-Shopify seller using the same stock is inside it. This is exactly the shape of most growing sellers' businesses.
What this means practically
Pull your Amazon inventory placement report before assuming anything. You are looking for the states your stock has been stored in, then the rules in those states, then whether you also sell outside the marketplace into them. That sequence — not a blanket "FBA means nexus everywhere" — is what produces a registration list you can defend and afford.
A different tax entirely
Sales tax is not income tax.
Being registered for sales tax in Washington says nothing about whether you owe US federal income tax, and the answers usually diverge.
Under the Canada–US treaty, your business profits are taxable only in Canada unless you carry on business in the US through a permanent establishment. The treaty then says specifically that using facilities solely for storage, display or delivery of goods, or keeping a stock of goods solely for storage, display or delivery, does not create one.
That is a strong position for a seller whose only US footprint is inventory in Amazon's warehouses. It is not, however, an exemption from filing:
- A Canadian corporation relying on it normally files a protective Form 1120-F, because failing to file on time can forfeit deductions and credits against US income — leaving tax calculated on gross receipts.
- The treaty position itself is disclosed on Form 8833. The penalty for not disclosing is $1,000, or $10,000 for a corporation.
- Form W-8BEN-E is not a return. You give it to Amazon or another withholding agent to document your foreign status. Do not treat filing it as having filed anything with the IRS.
A US office, US employees, or an agent who habitually concludes contracts for you is a different story, and the storage exception will not help.
Order of operations
Map the sales
By state, for twelve months, gross and by channel.
Map the inventory
From the placement report, not from memory.
Rank by exposure
Register where you are clearly over, before the states with the ambiguous inventory question.
Fix the store
Rates and product taxability configured, so registration does not create a collection gap.
Then the federal position
The treaty filing, once a year, with the Canadian return.
Quick answers
What Canadian sellers ask about US tax.
Does a Canadian seller have to collect US sales tax?
In any state where you have nexus and are not covered by a marketplace facilitator. Nexus comes from selling enough into the state, or from having a physical presence such as inventory. Thresholds are commonly $100,000 or $500,000 of sales, and they vary by state.
Amazon collects sales tax for me. Am I finished?
For Amazon's own orders in marketplace facilitator states, generally yes. Your own website is not covered, and some states still expect you to be registered and filing returns even where the marketplace remits.
Does FBA inventory create nexus?
In some states plainly yes — Washington and California treat inventory as physical presence, and Texas loses you the remote-seller safe harbour. Illinois says marketplace-only inventory does not, unless the same stock also fills your non-marketplace orders. Check the states your stock was actually placed in.
Do I have to file a US income tax return?
Often yes, even when you owe nothing. A Canadian corporation relying on the treaty's storage exception normally files a protective Form 1120-F with Form 8833. Filing late can cost you the deductions against any US income, so the protective filing is cheap insurance.
Can you handle the US registrations for us?
Yes — we determine where you have nexus, register you, configure the rates in your store and file the state returns. Call 647-870-8498.
Sources: state revenue departments for California, Texas, Washington, Illinois and Virginia; the Canada–United States tax convention, Articles V and VII; IRS instructions for Forms 1120-F, 8833 and W-8BEN-E. Rules and thresholds differ by state and change often. General information, not advice for your business — and US state tax positions in particular should be confirmed for your own facts. See also GST/HST for Shopify and Amazon sellers.
Selling into the US and unsure where you are registered?
Call 647-870-8498 or email info@ghayurtax.com. We map it, register it and file it.