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5-Minute Sales Tax Risk Assessment

Identify Your Filing Obligations and Audit Risk
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1
Test 1

Economic Nexus

The Rule:

Most states now require out-of-state sellers to collect sales tax once they exceed certain sales thresholds, regardless of physical presence.

The Threshold:

$100,000 in revenue OR 200 transactions in any single state within a year.

Common Triggers:

  • Selling through your own website to customers nationwide
  • Rapid growth in e-commerce sales
  • Expanding into new markets without tax review

Self-Assessment:

Have you exceeded $100,000 in sales OR 200 transactions in any state where you don't currently collect sales tax?

2
Test 2

Physical Presence

The Rule:

Physical presence extends beyond buildings to inventory, employees, and contractors.

The Threshold:

$100,000 in revenue OR 200 transactions in any single state within a year.

Common Triggers:

  • FBA or 3PL inventory in another state
  • Remote employees or contractors working from other states
  • Trade show attendance with onsite order-taking

Self-Assessment:

Do you have inventory stored, employees working, or contractors operating in states where you don't currently file?

3
Test 3

Product Taxability

The Rule:

What's taxable varies dramatically by state. Digital goods, SaaS, and services have inconsistent treatment.

The Danger:

Assuming your product is non-taxable everywhere because it's non-taxable in your home state.

Common Triggers:

  • Selling software, downloads, or streaming services
  • Offering installation, consulting, or professional services
  • Bundling taxable and non-taxable items

Self-Assessment:

Do you sell digital products, SaaS, or services that might be taxable in some states but not others?

4
Test 4

Marketplace Sales

The Rule:

Marketplace facilitators (Amazon, Etsy, etc.) collect tax on your behalf for marketplace sales, but NOT for your direct sales.

The Danger:

Assuming marketplace collection covers all your obligations, or double-collecting on marketplace sales.

Common Triggers:

  • Selling on Amazon FBA plus your own Shopify store
  • Using multiple marketplaces with different rules
  • Wholesale and retail sales through different channels

Self-Assessment:

Do you sell through marketplaces AND directly through your own website?

5
Test 5

Past Exposure

The Rule:

Past non-compliance doesn't disappear. States can audit back 3-8 years depending on jurisdiction.

The Danger:

Registering to collect tax going forward can trigger audits of past periods. This requires careful planning.

Common Triggers:

  • Growing business that never had a formal tax review
  • Changing business models without updating tax compliance
  • Acquiring a business with unknown tax history

Self-Assessment:

Have you been selling for more than a year without conducting a sales tax review?

Contact Smart Accountancy for a
Professional Nexus Study

We can help you enter Voluntary Disclosure Agreements (VDA) where we approach states anonymously on your behalf. States often waive penalties and limit lookback periods (2 years instead of 7) in exchange for voluntary compliance.
Schedule Free Nexus Consultation