What do I do the moment I cross an economic nexus threshold in a state?

When you cross an economic nexus threshold in a state, the clock starts immediately. Here’s the exact sequence to handle it correctly.

Step 1: Confirm the crossing

Don’t act on an estimate, verify the crossing with your actual sales data.

Pull your order history for the state filtered to the current measurement period (calendar year in most states, trailing 12 months in a few). Include all sales channels: your own store, Amazon, Etsy, Walmart, and any others. In most states, marketplace-facilitated sales count toward your threshold.

Confirm the crossing date: the specific date your cumulative sales into that state exceeded the threshold. This date determines your collection obligation start date.

Step 2: Determine your collection start date

In most states, collection begins on the first of the following calendar month after the crossing. Some states allow a full calendar quarter buffer. A small number require collection starting on the next transaction.

If you crossed in the middle of a month and aren’t sure of the state’s rule, use first-of-following-month as your default, it’s the most common rule and it’s conservative.

Your collection start date is the date by which your registration must be active and your platform must be configured to collect. Work backward from this date to set your urgency.

Step 3: Register for a sales tax permit

Start the registration process now. Don’t wait until the end of the month.

Most states register online through their Department of Revenue portal. You’ll need:

• Federal EIN
• Legal business name and address
• Primary business contact
• Business entity type
• NAICS code or business activity description
• Expected annual sales into the state (for assigning filing frequency)

Processing times:

• Most states: 1–4 weeks
• California: 4–8 weeks (CDTFA portal; sometimes faster)
• Texas: often same-day via eSystems
• A few states mail a paper confirmation that adds time even if online registration is instant

If you’re registering in an SST member state through a Certified Service Provider, the CSP handles registration for you through the SST Central Registration System.

Step 4: Configure your platform to collect

Before your permit arrives (ideally), configure your ecommerce platform to start collecting in this state on your obligation start date.

In Shopify: Settings → Taxes and duties → Add nexus region. Add the new state.

In WooCommerce: Update your tax settings to include the new state in your nexus list.

In your tax software or platform: flag the new state as active from your obligation start date.

Important: Don’t enable collection before your permit is active. You’ll also want to confirm your product tax codes are set correctly for this state before collection goes live, not all product types are taxable in all states, and a misconfigured tax code either overtaxes your customers or undertaxes on your returns.

Step 5: Determine your filing frequency and first due date

When the state processes your registration, it assigns a filing frequency (monthly, quarterly, or annual) based on your expected revenue volume. Higher-volume sellers typically get monthly.

Your first return covers the period from your permit effective date through the end of that month or quarter. Set a calendar reminder for the first due date and confirm your sales tax platform is set up to file.

Step 6: Verify marketplace-facilitated sales are reported correctly

If you also sell on Amazon, Etsy, or other marketplaces in this state, confirm how your state return handles those sales. Some states require you to report gross sales across all channels (with marketplace-facilitated sales deducted as “tax collected by marketplace”); others only require reporting your direct-channel sales.

Related: How do I report marketplace transactions on my state sales tax return?

If you’re already past the collection start date

If you discover you crossed a threshold and your obligation already started (last month, or several months ago) you have back-tax exposure for the gap period. Address it:

• Short gap (1–3 months): Register now, calculate the uncollected tax for the gap period, and remit it with interest as part of your first filing.
• Longer gap: Consider a VDA, which limits your lookback and waives penalties.

The sooner you act, the smaller the gap and the simpler the resolution.