Selling to the US This Black Friday? The Sales Tax Trap Australian Exporters Miss
Black Friday and Cyber Monday are the biggest sales weekend of the year, and for Australian businesses selling online into the US, they can be a huge win. But a big spike in US sales can also trigger a tax obligation many exporters have never heard of: economic nexus.
If you cross a US state's sales threshold, you may be required to register, collect and remit sales tax in that state, even though you have no office, warehouse or staff there.
What is economic nexus?
Prior to 2018, a company did not need to collect sales tax on behalf of the US states unless they had physical presence within that state. This changed following the case of South Dakota v. Wayfair decided in the US Supreme Court. From then onwards, a state could collect sales tax solely based on the sales of the company.
All US states with a general sales tax have now implemented economic nexus laws, meaning an Australian company sending goods or selling online goods to consumers in America can be subject to it.
Why Black Friday makes it risky
Most exporters watch their total revenue, but economic nexus is tracked state by state. A promotion that sends a surge of orders to customers in one or two states can push you over a threshold in a matter of days.
Here is how the thresholds typically work:
The common threshold is $100,000 USD in sales into a state in the current or previous calendar year.
Some states set it higher. California, Texas and New York, for example, use $500,000.
Many states count gross sales, not taxable or net sales. Exempt sales, wholesale orders and discounts may still count toward the total.
Transaction-count tests are disappearing. Illinois removed its 200-transaction threshold from 1 January 2026, and Kentucky removed its transaction threshold from 1 August 2026. More states are moving to revenue-only tests, but some still use both.
The threshold can be crossed mid-year. Once you pass it, you generally need to start collecting tax from that point on, not on the earlier sales.
Because rules differ by state, "I'm only a small Australian business" is not a safe assumption.
What happens if you miss it?
When you go across a boundary and do not file the required forms, you will be responsible for collecting the sales tax that you were supposed to collect anyway. Since you did not charge your customers, the tax ends up being deducted from your margin. This can be quite disastrous for your firm if your margin is thin.
Does Amazon or Shopify handle this for me?
It does, but that's the part that confuses a lot of people. All states have marketplace facilitator statutes, which make the Amazon and Etsy marketplaces collect and pay the tax on behalf of the seller in any transaction conducted in the marketplace. However:
• The sale through your own website (even on Shopify) is not covered by such laws.
• Marketplace transactions might count toward the thresholds required by your state.
• Even in cases where the platform collects the tax, you might have other registration and filing obligations.
A quick checklist before Black Friday
1. Review your sales per state in the current calendar year as well as last year, based on your store or accounting records.
2. Compare the sum for each state against the state's threshold, as well as how much slack you have.
3. Determine how your promotion will affect you. Make contingency plans in case a large sale pushes you over the threshold.
4. Identify marketplace sales versus direct sales in order to know which is which and which sales tax you need to collect.
5. Implement your tracking system so that you know when you are close to reaching the threshold, and not after you have surpassed it.
6. Seek guidance prior to exceeding the threshold, not after. Registration takes time, and collecting tax from the very first taxable sale is a whole lot easier than backdating it.
Don't let a record sales weekend turn into a tax bill
It has become increasingly difficult to deal with US sales tax, especially because regulations keep changing from time to time. It is important to understand that threshold levels, definitions and requirements vary from state to state and get updated on a constant basis.
Our professionals at TaxCart will assist you in figuring out what needs to be done to make sure there are no surprises while taking part in Black Friday shopping. Contact us before your next major sales campaign in the USA.
This article is general information only and is not tax advice. Rules vary by state and change often, so speak with a qualified tax professional about your specific situation.