Guides

US Sales Tax for Developers

Building e-commerce platforms, SaaS applications, and marketplaces means working inside one of the most fragmented regulatory systems in software: US sales tax. There is no federal sales tax and no single rulebook. Instead there are 45 states and the District of Columbia that impose one, local jurisdictions in Alaska that impose their own, and more than 11,000 taxing jurisdictions in total, each with its own rates, thresholds, and definitions of what counts as taxable.

This guide covers the concepts that decide the number on the invoice. Get these right and the API calls are straightforward.

For implementation details, see the Tax Estimate guide and the API Reference.

The Four-Factor Taxability Framework

Sales tax is not a yes or no decision. Every transaction runs the same four checks, in this order, and the first "no" ends it and returns zero tax.

Nexus and registrationDo you owe anything in this state at all?

Tax is only due where an active registration covers the destination. Nexus is the obligation; the registration is the permit that lets you collect against it. See nexus types below.

NO →No tax. The estimate comes back with hasActiveRegistration: false and every amount at zero.

The estimate reports the registration, not nexus. Nexus lives on nexus determinations as economicNexusMet and physicalNexusMet. Set simulateActiveRegistration to true to price the sale as if you were registered.

Product taxabilityIs this thing taxable here?

Driven by the item's product category. Groceries, clothing and SaaS all swing state by state.

NO →Exempt product. The line comes back with exempt: true and an exemptReason saying why.

Each entry in the line's taxItems reports the outcome of the rule lookup behind that tax.

Customer exemptionIs this buyer exempt?

Resellers, government agencies, nonprofits and educational institutions, backed by a certificate on file.

YES →No tax. The line comes back with exempt: true and an exemptReason, and the certificate is what defends it in an audit.

When customer.externalId matches a customer Kintsugi already holds, that customer's exemptions and tax registrations are applied automatically. Only an exemption with status ACTIVE is applied. For a one-off that belongs to no customer record, set exempt: true on the line instead.

SourcingWhose rate applies?

Destination states use the buyer's delivery address; a handful of origin states use the seller's location for sales inside their own borders. This decides which jurisdictions appear in taxItems, never whether tax is due.

All four pass, so tax is due

Each line's taxItems lists the tax applied per jurisdiction, and its taxRate is the combined rate.

At checkoutCollect the taxCharged to the buyer. The money is not yours to hold.

On the filing dateRemit and fileOn the frequency the state assigns: monthly, quarterly or annually.

Order matters, and check 2 needs data from you. Each estimate line names either an externalProductId you have already created or a productCategory and productSubcategory pair from the catalog. A pair that does not match the catalog returns 400, and a product that has not been classified yet is priced under the product code UNKNOWN_UNKNOWN.

Nexus Types: Physical vs Economic

Before 2018, a state could only tax sellers with a physical presence inside it. South Dakota v. Wayfair removed that limit, and every state with a sales tax now also asserts economic nexus. The two are independent, and one is enough.

Type APhysical nexusSomething of yours is in the state.

Any one of these triggers it

Offices, stores and warehousesEmployees and contractors, including remote staffInventory storage, including 3PLTrade shows and events

Obligation startsImmediatelyRegister before the first taxable sale. There is no grace threshold.

Type BEconomic nexusYou sold enough into the state.

Usually either one triggers it

Sales volumeCommonly $100,000, measured over a rolling year or a calendar year.

Transaction countOften 200 sales, though many states have dropped it.

Obligation startsOn the effective dateThe state sets it once you cross. Register, then collect from that date.

Thresholds, measurement windows and combination rules all vary. New York needs both $500,000 and more than 100 sales; California and Texas look at $500,000 in sales alone. Kintsugi tracks the live values per state, so treat these numbers as shape, not law.

Nexus and registration are different things. Nexus is the obligation; a registration is the permit that lets you collect against it. Kintsugi calculates tax where you hold an active registration, and the estimate response reports hasActiveRegistration so you can tell a zero-tax sale from an unregistered one. Set simulateActiveRegistration to true to see what the sale would be taxed at if you were registered. Nexus itself lives on nexus determinations, which report economicNexusMet and physicalNexusMet per jurisdiction.

Monitor Sales by State

Track revenue and transaction counts per state against that state's own threshold, window, and combination rule.

Set Up Threshold Alerts

Watch for states you are approaching, not just states you have crossed. Registration takes time.

Collecting sales tax without a permit is unlawful in every state that levies it. The money is not yours to hold.

Collect From the Effective Date

Start collecting on the date the permit takes effect, which is not always the date you applied or the date it arrived.

Sourcing Rules: Origin vs Destination

You have nexus and a taxable product. One question remains: whose rate applies?

Remote sales are always destination-sourced. Origin sourcing is a rule for intrastate sales, where the seller has a location in the same state as the buyer. If you are a remote seller with economic nexus and no presence in the state, use the ship-to address regardless of that state's intrastate rule.

Marketplace Facilitators

Every state with a sales tax now has marketplace facilitator legislation, which moves the duty to collect from the seller to the platform. Whether it applies to you comes down to one question: does the platform take the buyer's money?

Platform processes paymentFacilitatorAmazon, eBay, Etsy, Walmart, TikTok Shop

Calculates taxPlatformRemits and filesPlatform

You do not register for these salesSend them to Kintsugi anyway, with marketplace: true on the transaction. The tax liability is excluded. Whether their gross sales count toward a state's nexus threshold depends on the state: each nexus period's includeMarketplaceTransactions says.

You process paymentStorefrontShopify, WooCommerce, your own checkout

Calculates taxYouRemits and filesYou

Compliance is yours end to endThis is the path the four checks describe.

Selling on both is the normal case. Marketplace sales being handled by the platform does not exempt you from registering for your direct sales, and it does not undo physical nexus you already have in that state. Segregating facilitated from direct sales in your own reporting is what keeps the two straight at filing time.

Collection Timeline

Sales tax obligations follow a sequence, and every step in it is a date your system should know.

Home State Registration

Physical Nexus Registration

Economic Nexus Monitoring

Track sales by state and register once you cross. The deadline runs from the crossing date and varies by state, so record the date you crossed, not just the fact that you did.

Begin Collection

Collect from the effective date of your permit, and apply the rate for the buyer's address on every order from that point.

File Returns

File and remit on the frequency the state assigns, whether monthly, quarterly, or annually. File even for periods with no sales: most states require a zero return, and missing one draws a penalty on nothing.

System Architecture Requirements

A compliant system needs all of the following. Kintsugi maintains this logic for you:

Sales tax obligations move as your business grows, as states change their laws, and as you add sales channels. The five concepts on this page (the four checks, nexus types, sourcing, marketplace facilitator rules, and collection timing) are what let you build systems that scale with the business instead of being rewritten by the next threshold you cross.

Next Steps

Get Started

Ready to implement? Start with the Getting Started Guide and the API Reference.

Need Help?

Questions about your specific use case? Check our Support Center or contact our team.