US sales tax
US sales tax on international invoices: a state-by-state review
The United States has no single nationwide sales-tax invoice rule. A foreign seller may need to register, collect and document tax in particular states based on nexus, destination and the product or service sold.
Decision summary
- Review each state where customers are located or activity occurs.
- Economic nexus thresholds and marketplace rules vary.
- Product and service taxability is jurisdiction-specific.
- Exemption documentation should be validated and retained.
Why a country selector cannot calculate US sales tax
Sales and use taxes are administered by states and, in many places, local jurisdictions. Rates, sourcing, taxable products, exemptions, filing frequencies and invoice expectations vary. A US destination therefore starts a review; it does not produce one defensible national percentage.
Federal identifiers such as an EIN do not replace a state sales-tax permit. A foreign seller can have state collection obligations even without a US company if its activity meets that state's nexus rules.
Check physical, economic and marketplace nexus
Physical presence can include people, inventory, offices, contractors or other in-state activity. Economic nexus rules use sales or transaction thresholds, with details that differ by state and change over time.
Marketplace-facilitator laws may require a platform to collect on facilitated sales, but the seller can retain registration, reporting or direct-sale obligations. Separate platform sales from direct invoices in the review.
- Customer destination by state and local jurisdiction
- Current and prior-period sales totals
- Transaction counts where still relevant
- Inventory, staff, contractors and events
- Marketplace-collected versus direct sales
Determine whether the item is taxable
Tangible goods are often taxable, but state exemptions and product categories differ. Software, SaaS, data processing, professional services, training and digital products receive different treatment across states.
Customer type alone is not enough. Resale, nonprofit, manufacturing and other exemptions usually require a valid certificate or documentation in the form accepted by the state.
Show the collected tax transparently
When registered and required to collect, identify the taxable amount, tax charged and total. The level of jurisdiction detail shown can depend on the state's rules and customer needs; accounting records should preserve the calculation even when the invoice presents one combined tax amount.
When no tax is collected, avoid claiming “tax exempt” unless an exemption applies. A neutral note such as “US sales tax not collected — seller obligation under review” may be more accurate during setup, but confirm customer-use and state rules before issue.
Review point: Billr deliberately uses a review flag for US destinations. It does not maintain live state and local rates or test nexus thresholds.
Common questions
Do foreign companies have to collect US sales tax?
They can. A state may impose collection duties when physical or economic nexus exists, subject to that state's rules and marketplace provisions.
Is an EIN a sales-tax registration number?
No. An EIN is a federal tax identifier. Sales-tax permits are generally issued by states.
Can I use the customer's billing address for the rate?
Sourcing rules vary, and the delivery or service-use location can matter. Use the jurisdictional rule and a reliable address-validation process.
Primary sources
Use these current public sources to verify the treatment for your transaction.
- Remote Seller Collection AuthorityFederation of Tax Administrators
- Remote Seller FAQsStreamlined Sales Tax Governing Board
- State tax agency directoryFederation of Tax Administrators