Sales Tax Permit: What It Is and Who Needs One

What a Sales Tax Permit Actually Is

A sales tax permit, sometimes called a seller's permit, a sales and use tax license, or a certificate of registration depending on the state, is the state's authorization for your business to collect sales tax from customers on taxable sales and remit it to the state on a schedule the state assigns. It's not optional once you're required to have one: most states treat collecting sales tax without first registering, or failing to register when required, as a violation separate from the underlying tax itself.

Five States Don't Have One at All

Alaska, Delaware, Montana, New Hampshire and Oregon don't impose a general state sales tax, so there's no state-level sales tax permit to register for in those states. Alaska is a partial exception: while it has no state sales tax, some municipalities impose their own local sales tax, which may require a separate local registration depending on where you operate. Every other state requires registration once you meet that state's criteria for being required to collect its tax.

Physical Presence Nexus

The traditional trigger for needing a sales tax permit is having a physical presence in a state: an office, a warehouse, an employee, or inventory stored there, including inventory held in a third-party fulfillment center. If your business has any of these in a state that charges sales tax, you generally need to register there regardless of your sales volume.

Economic Nexus: Registering Without a Physical Presence

The Supreme Court's 2018 decision in South Dakota v. Wayfair allowed states to require sales tax collection from sellers with no physical presence in the state, based solely on their sales activity there, a concept known as economic nexus. Most states that adopted this standard set a dollar threshold, commonly $100,000 in sales to customers in that state during a year, and some states also set a separate transaction-count threshold, though a number of states have dropped the transaction-count test and kept only the dollar threshold. Because these thresholds are set independently by each state, an online seller with customers across the country needs to track its sales by state and check each state's specific current threshold rather than assuming one number applies everywhere.

How to Register

Registration is generally handled through each state's department of revenue or equivalent tax agency, commonly through an online portal, and asks for your business's legal name, EIN, and the date you started or expect to start making taxable sales there. Many states don't charge a fee for this registration at all; a handful charge a modest one. Register before you begin collecting tax in that state, not after, since collecting tax under the wrong registration status is itself a compliance problem.

What You're Responsible for Once Registered

A sales tax permit isn't a one-time filing; it comes with an ongoing obligation to file sales tax returns, even for periods with no sales, on whatever schedule the state assigns, commonly monthly, quarterly or annually based on your sales volume. Missing a return can trigger penalties and interest independent of whether you actually owed any tax that period.

Marketplace Sales Can Shift Who Collects

If you sell exclusively through a marketplace that collects and remits sales tax on your behalf under that state's marketplace facilitator law, you may not need your own permit for sales made solely through that marketplace in that state. This varies by state and by what you sell outside the marketplace, so confirm your specific situation rather than assuming marketplace sales cover every state where you also sell directly.

Track Your Sales by State as You Grow

Because economic nexus thresholds are based on your sales volume in each state, a new registration requirement can appear as your business grows even though nothing about how you operate has changed. Review your state-by-state sales periodically, not just once at startup.

Registering in the Wrong State Order Can Create Gaps

If you wait to register in a state until after you've already crossed its threshold, you may owe back tax for sales made before you registered, even though you weren't charging customers tax on those sales. Monitor thresholds proactively rather than reactively.

A Marketplace Doesn't Always Cover Everything

If you sell both through a marketplace and directly through your own site, confirm which of your sales the marketplace is actually collecting tax on; your direct sales in the same state may still require your own registration.

This Is Not Tax Advice

Sales tax nexus rules, thresholds, and registration requirements are detailed, change periodically, and depend on your specific products and sales pattern. Talk to a tax professional familiar with multistate sales tax before expanding sales significantly into new states.