Sales Tax Nexus: A Guide for Long Island E-Commerce Sellers

If you sell online and ship to customers in other states, there is a tax question you cannot afford to ignore: where do you owe sales tax? For years the answer was simple. You collected sales tax only in states where you had a physical presence. A 2018 Supreme Court decision changed that for every e-commerce seller in the country, including the many Long Island businesses running stores on Shopify, Amazon, Etsy, and their own websites.

Here is what changed, what it means for your store, and how to stay on the right side of the rules.

What "Nexus" Actually Means

Nexus is simply the connection between your business and a state that is strong enough to require you to collect and remit that state's sales tax. There are two kinds that matter most to online sellers.

Physical nexus is the traditional version. You have a physical connection to a state: an office, a warehouse, employees, or inventory stored there. If you keep stock in a fulfillment center in a particular state, that alone usually creates physical nexus.

Economic nexus is the newer concept. Following the Supreme Court's decision in South Dakota v. Wayfair, states can require you to collect sales tax based purely on your sales volume into that state, even with no people or property there. Cross a state's dollar or transaction threshold and you have economic nexus.

Economic Nexus Thresholds and Why They Vary

After Wayfair, nearly every state with a sales tax adopted an economic nexus standard. The catch is that the thresholds are not uniform. Each state sets its own, and they are not the same from one border to the next.

A common benchmark is $100,000 in sales or 200 separate transactions into the state in a 12-month period, which is the standard South Dakota used. But many states differ:

• Some use a higher dollar threshold, such as $500,000 (California, Texas, and New York all sit at this level)
• Some have dropped the separate transaction count entirely and look only at dollars
• The measurement period varies, with some states using the prior calendar year and others a rolling 12 months
• States differ on whether the threshold counts all sales or only taxable retail sales, and whether marketplace sales are included

Because the rules differ this much and states continue to adjust them, you should never assume one state's threshold applies everywhere. Always verify the current figure for each state where you have meaningful sales.

Marketplace Facilitator Rules

If most of your sales run through a large marketplace, there is good news. Every state with a sales tax now has marketplace facilitator laws. These laws shift the duty to collect and remit sales tax onto the platform itself rather than the individual seller.

In practice, this means that when you sell through Amazon, Etsy, eBay, or Walmart Marketplace, the platform calculates, collects, and remits the sales tax on those transactions for you. You generally do not register or file for sales you make purely through those marketplaces.

How to Register and Collect Once You Have Nexus

Once you determine you have nexus in a state, whether physical or economic, the process generally follows the same path:

1. Register for a sales tax permit with that state's department of revenue or taxation. Do this before you begin collecting. Collecting tax without a permit is itself a problem in most states.
2. Configure your store to charge the correct rate. Rates vary by state and often by county and city, so most sellers rely on the built-in tax engine in Shopify, or a service such as Avalara or TaxJar, to apply the right rate by destination.
3. Collect the tax from your customers at checkout on taxable sales shipped into that state.
4. File and remit on the schedule the state assigns you (monthly, quarterly, or annually). You must file even for periods with no tax due, or you risk penalties.

New York Sales Tax Specifics

For Long Island sellers, New York is usually where you start. If you are based in Nassau or Suffolk County, you have physical nexus in New York from day one and must register with the New York State Department of Taxation and Finance and collect sales tax on taxable sales shipped within the state.

A few New York points worth knowing:

• New York's economic nexus threshold for out-of-state sellers is more than $500,000 in sales and more than 100 transactions into New York in the prior four sales tax quarters. Both tests must be met.
• Sales tax rates are a combined state and local rate, so the rate a Garden City customer pays differs from one in New York City or upstate. You charge based on where the item is delivered.
• Clothing and footwear sold for under $110 per item are exempt from the New York State portion of sales tax, though some localities still apply their share. This trips up apparel sellers regularly.
• New York requires sales tax returns on an assigned schedule, and the state is active about enforcement.

Staying Compliant as You Scale

The real challenge with sales tax is not any single state. It is that your obligations grow quietly as your store grows. A successful product launch or a viral month can push you over the threshold in three or four new states before you notice. Each one then carries its own registration, collection, and filing duties.

The sellers who stay out of trouble tend to do a few things consistently: they monitor sales by state against the relevant thresholds, they keep marketplace and direct sales clearly separated in their records, and they review their nexus footprint at least once a year. Getting behind is expensive, because uncollected sales tax becomes a liability you owe out of your own margin, often with penalties and interest attached.

This article is for informational purposes only and does not constitute tax or legal advice. Sales tax thresholds and rules vary by state and change frequently. Verify current requirements with each state or a qualified CPA before relying on any figure above. Contact us to review your specific situation.