Amazon FBA Sales Tax Nexus for Canadian Sellers: 50-State Map

If you are a Canadian seller using Amazon FBA, you are already triggering US sales tax nexus the moment your inventory ships to the first US fulfillment center. Marketplace facilitator laws now cover every state with sales tax, so Amazon collects and remits on most of your Amazon-channel orders. But three traps remain: off-Amazon sales (Shopify, Etsy, your own site), state-by-state economic thresholds for direct-to-buyer channels, and a separate income tax nexus that has nothing to do with sales tax. This post is the map you need before you ship pallet number one.

30-second triage: where do you actually owe?

Three different nexus tests, three different obligations.

Marketplace facilitator laws solve roughly 80% of the sales tax problem for FBA-only sellers. The remaining 20% (off-Amazon channels, registration mismatch, income tax nexus) is where most Canadian sellers get caught.

Physical nexus: FBA inventory triggers automatic registration in some states

When Amazon ships your inventory to a fulfillment center, you have inventory in that state. That inventory creates physical nexus. Whether you must register depends on the state.

Before marketplace facilitator laws (pre-2018), every FBA seller had to register in every state where Amazon stored inventory, around 25 to 30 states. Now, marketplace facilitator laws shift the collect/remit duty to Amazon for orders sold through the marketplace. That said, some states still require sellers with physical presence to register, even when collect/remit is handled by the marketplace.

States where FBA sellers commonly still register due to physical inventory presence:

• Pennsylvania: Historically aggressive. Marketplace facilitator now collects, but registration may be requested.
• California: AB 147 + marketplace facilitator covers Amazon. Direct sales still require registration if economic threshold met.
• Washington: Marketplace facilitator covers, but B&O tax (gross receipts) is separate. Always register.
• Texas: Marketplace facilitator covers Amazon. Franchise tax (no-tax-due threshold $2.65M, current 2026~2027) separate income tax obligation.

Use Amazon Seller Central's Inventory Event Detail Report to see exactly where your inventory is held. You cannot rely on the FBA fulfillment center map because Amazon redistributes between centers without notice.

Economic nexus: 50-state threshold groups

The Wayfair v. South Dakota decision (2018) cleared the way for states to require remote sellers without physical presence to register once they exceed a sales or transaction threshold. Most thresholds are gross sales into the state, including marketplace and direct.

Grouped by threshold structure (2026 rates):

For most Canadian FBA sellers under $500K annual US sales, the practical map is: Amazon handles sales tax in 47 states + DC, you have no off-Amazon channels, no registration required. Cross either the $100K threshold or any off-Amazon channel and the matrix activates.

Marketplace facilitator coverage: where Amazon does the work

All 45 states with statewide sales tax + DC have enacted marketplace facilitator laws. Amazon collects and remits sales tax on Amazon-channel orders in all of them. The seller-side obligation in those states for Amazon-only revenue is generally:

• No collect/remit duty (Amazon handles)
• Possible registration duty if physical inventory + state-specific rule (rare since 2022)
• No filing obligation if registered with no taxable sales (some states allow zero returns)

Where the seller still has work even on Amazon-channel revenue:

• Income tax / franchise tax (separate from sales tax)
• Business license at city/county level (Washington B&O, Texas franchise, etc.)
• Wholesale resale exemption certificates for inventory passed through

For non-Amazon channels (Shopify, your own site, Etsy without their facilitator coverage in that state), every state where you exceed economic threshold requires direct registration.

Income tax nexus: a different rulebook

This is where Canadian sellers most often miss the obligation. Sales tax nexus and income tax nexus are governed by different rules, and the Canada-US tax treaty offers very different protection.

Income tax nexus arises when you have a permanent establishment (PE) in the US, which under the Canada-US tax treaty Article V means a fixed place of business or a dependent agent. Inventory in a third-party warehouse like an Amazon fulfillment center generally does not create PE under the treaty, provided the warehouse is used solely for storage, display, or delivery.

In practice, most Canadian FBA sellers do not create a US income tax PE. The treaty protects them. But the protection requires:

• Filing IRS Form 8833 (Treaty-Based Return Position Disclosure) annually, even when no tax is owed, when claiming treaty protection on PE
• Filing Form 1120-F (corporate) or Form 1040-NR with PROTECTIVE return status to preserve the treaty position and the statute of limitations

Without these protective filings, the IRS can later determine PE existed, and the statute of limitations remains open indefinitely. The protective return is cheap insurance.

Some states have their own income tax nexus rules (Washington B&O, Texas franchise) that do not respect the federal treaty PE rules. Those state-level filings are separate.

How to use the FBA Inventory Event Detail Report

Amazon Seller Central provides the data you need to track where inventory has been held.

Path: Reports > Fulfillment > Inventory Event Detail. Filter by event type "Customer Order" or "Receipt" and group by Fulfillment Center. The report shows fulfillment center codes (e.g., ONT8 for Ontario, California; PHX7 for Phoenix, Arizona). Cross-reference codes to states using Amazon's published warehouse locations.

Run the report quarterly. Save monthly snapshots. If you ever face a state audit, this is the primary evidence of when and where you had inventory.

Sales tax permit registration as a Canadian: SSN, ITIN, or EIN?

States have varying requirements for non-US residents registering for sales tax permits.

The practical path for Canadian LLC sellers: register the LLC, use its EIN as the registration identifier, list the Canadian member as responsible party. Some states ask for a US bank account; most accept Canadian banking with a US-format routing alternative.

Canada side: GST/HST $30,000 threshold and CRA reporting

Selling on Amazon FBA does not exempt you from Canadian sales tax obligations on your Canadian-source activities. The CRA small supplier exemption is $30,000 in gross worldwide taxable supplies in any 4 consecutive calendar quarters. Cross that threshold, and you must register for GST/HST.

For a Canadian seller running US FBA operations from Canada:

• Inventory purchased in Canada and shipped to US: zero-rated supply (export). Track for CRA reporting but no GST/HST collected
• Sales to US customers (whether through Amazon FBA or otherwise): zero-rated, no GST/HST
• Sales to Canadian customers: GST/HST applies based on customer's province
• ITC (input tax credits) available on Canadian business expenses if registered

The Canadian side is generally well-handled by Canadian accountants. Where it intersects with US is when you need to remit accumulated FBA cash from US to Canada, which involves currency conversion timing and potential FX gain/loss reporting.

Worked example: Toronto seller, $250K US gross, mixed channels

Concrete numbers ground the matrix.

Assumptions:

• Toronto Canadian LLC seller
• 2026 US gross sales: $250,000
• 80% Amazon FBA ($200,000), 20% Shopify direct ($50,000)
• Inventory in Amazon warehouses: California, Texas, Pennsylvania, Florida, Arizona

Sales tax obligations:

Income tax obligations:

Total cross-border filings: 2 protective federal forms. Compare to pre-marketplace-facilitator era, when this seller would have registered in 5 states for sales tax. The filing burden has dropped 70%.

Frequently asked questions

Does Amazon send a 1099-K to Canadian sellers, and do I owe US income tax on FBA sales? Amazon is required to issue 1099-K forms when gross payments exceed $5,000 in 2024 (lower threshold). Receiving a 1099-K does not mean you owe US tax. Under the Canada-US treaty, your Amazon FBA business generally has no US permanent establishment, so federal income tax does not apply to your business profit. File Form 8833 + protective Form 1120-F or 1040-NR to lock in the treaty position.

If Amazon collects sales tax on every state, why would I ever register for a sales tax permit? Three reasons. First, off-Amazon sales (Shopify, your own site) are not covered by Amazon's collect/remit. Second, some states require registration for inventory-based physical nexus even when the marketplace collects. Third, if you sell wholesale to other US sellers, you need a resale exemption certificate to buy inventory tax-free, which requires registration in some states.

Do I need a US bank account to register for state sales tax permits? Most states accept Canadian banking. A few state portals require a US-format account number. The workaround: open a US business account in the LLC's name with services like Mercury or Wise (USD). Most Canadian FBA sellers already have one for receiving Amazon disbursements.

Related reading

• Form 5472 obligations for Canadian LLC owners
• EIN by fax for Canadian residents
• Mercury, Relay, and Wise for Canadian LLC banking
• Bank rejecting your registered agent address