You must collect sales tax in any state or country where your business has nexus — a connection that creates a tax obligation. Nexus can result from exceeding sales thresholds, storing inventory, employing remote workers, or selling through affiliate relationships. 

The 2018 South Dakota v. Wayfair ruling allows all 45 states with sales tax to require remote sellers to collect and remit taxes, even without a physical presence. Most states use $100,000 in sales or 200 transactions as the threshold, though exact rules vary. 

Frequent errors include failing to register or deregister correctly, misapplying tax to delivery fees or tax holidays, using outdated product codes for imports, or mishandling exemption certificates. Avalara’s Ecommerce and Tax Compliance guide offers practical tips to prevent these issues. 

Retailers must collect, validate, and securely store resale or exemption certificates for all qualifying sales. Missing or expired certificates can lead to penalties. Automation tools like Avalara Exemption Certificate Management simplify tracking and renewals. 

Digital goods such as software, ebooks, and streaming content are taxed differently by state and country. Cross-border sales also require accurate tariff or Harmonized System (HS) codes to calculate duties correctly and avoid costly delays or overpayments. 

Before selling in a new market, businesses may need to register with local tax authorities to collect and remit VAT, GST, or sales tax. Failure to do so can result in fines, delayed shipments, or blocked imports. 

Hidden costs are one of the top reasons for cart abandonment. Be transparent about duties, taxes, and shipping costs at checkout to improve trust and reduce lost sales. 

Businesses — not couriers — are responsible for accurately valuing goods, preparing customs documentation, and paying applicable duties. Understanding duty rates by product and country is key to maintaining profitability and avoiding unexpected costs. 

Drop shipping occurs when a seller accepts an order but a supplier ships directly to the customer. Sales tax responsibilities depend on where each party has nexus. If neither has nexus, the customer may owe use tax. 

Automation software like Avalara streamlines sales tax calculation, filing, exemption management, and international VAT registration. It also automates tariff classification and duty calculation, ensuring accurate landed costs and smoother cross-border transactions. 

Avalara helps businesses of all sizes get tax compliance right — across sales tax, VAT, customs duties, and cross-border trade. With automated solutions for registration, calculation, filing, and reporting, Avalara integrates with your ecommerce systems to reduce manual effort and help you stay compliant as you grow internationally.