How to Stay Compliant With Multi-State Sales Tax in 2025
Running a CPG brand in 2025 means selling across state lines is just part of the game. But here’s the catch: every state with a sales tax is now watching—and thanks to Wayfair v. South Dakota, they don’t need you to have a physical presence to come collecting.
That 2018 Supreme Court ruling changed the rules for good. It gave states the green light to enforce “economic nexus,” which means if you cross a certain threshold in sales or transactions, you're on the hook for collecting and remitting tax. And yes, that applies to DTC brands on Shopify and Amazon too.
I’ve spent the last decade helping founders in tightly regulated spaces stay compliant while scaling. The brands that win are the ones that build systems early—before tax becomes a bottleneck.
You don’t need to memorize tax codes, but you do need a process to make sure you’re operationally compliant.. Let’s walk through how to stay compliant, stay sane, and stay focused on growth.
What Is Economic Nexus and Why It Matters Now
Before Wayfair v. South Dakota, most businesses only had to collect sales tax in states where they had a physical presence, like an office, warehouse or employees. That changed with the 2018 ruling.
Now, simply selling into a state can create a tax obligation, even if you’ve never been there. This is called the economic nexus, and each state sets its own rules. Most use thresholds like $100,000 in gross sales or 200 individual transactions in a calendar year. Once you cross that line, you're expected to register, collect, and remit.
But physical presence still matters, especially for CPG brands using off-site operations. If you store inventory in a state through a 3PL, Amazon FBA or a co-manufacturer, that may create a physical nexus.
For example, if your co-manufacturer is in Texas and your business takes ownership of the product at their facility, you’ve established a nexus in Texas. If you ship finished goods to a 3PL warehouse in Illinois, you likely have nexus there too. Even having sales reps or field marketers working in another state can trigger nexus.
Distributors are a gray area. If they purchase your product outright and take title, you’re likely off the hook. But if they store and sell it on consignment, you may have an inventory nexus in those warehouse states.
The takeaway: tax liability can come from how and where you operate, not just where you sell. Your operational footprint matters, and tracking it is just as important as monitoring sales volume or retail growth.
What Shopify, Amazon, and Marketplaces Do (and Don't Do)
This is where things get messy. Many CPG founders assume platforms like Shopify and Amazon are fully handling sales tax. Sometimes they are. But often, they’re not.
Under marketplace facilitator laws, platforms like Amazon are required to collect and remit sales tax on your behalf in certain states. Sounds great—until you realize not every state defines “marketplace” the same way, and not all of your sales go through those channels. Even where tax is being collected, you may still need to register and file returns, including $0 filings, to stay fully compliant.
Shopify creates even more confusion. It’s a platform, but not considered a marketplace in most states. That means it won’t collect sales tax automatically unless you set it up yourself. I’ve worked with founders who assumed everything was covered, only to find out through an audit that they had unregistered nexus in half a dozen states.
None of this means Shopify or Amazon are doing anything wrong. They just weren’t built to manage tax compliance across all your channels.
If you're selling through a mix of DTC and marketplaces, it’s on you to understand which platforms are collecting where—and to fill in the gaps before they become a liability.
How to Track Nexus and Stay Compliant Across States
Staying on top of multi-state compliance is a heavy lift for most early-stage CPG brands. Manually tracking sales across a dozen states while trying to scale? Unrealistic. The good news is, you don’t have to do it alone. Several tools now exist that make sales tax compliance more manageable in 2025.
Here are the ones worth knowing:
Zamp: This comprehensive sales tax automation platform offers end-to-end compliance management, including nexus monitoring, registration, and tax calculation, filing and remittance, all within an intuitive dashboard environment.
Tax Hero: Designed for emerging and growth-stage brands, this platform automates nexus tracking, registration and return filing. It simplifies sales tax compliance with a lightweight system ideal for lean teams.
Numeral: This finance automation solution works best for operationally complex brands. It connects sales tax compliance with broader financial workflows, enabling synchronized reporting, multi-entity management and tax data integration across platforms.
But here's the reality: software only goes so far. These platforms can flag thresholds and generate reminders, but they won’t interpret the nuance or file paperwork for you unless you build those workflows—or hire someone to manage them.
Automation is a critical first step. Just know that you’ll still need a process for reviewing alerts, registering in new states, and keeping filings accurate. Especially if your brand sells through multiple channels or uses third-party logistics, staying compliant takes more than just toggling on a feature. It takes follow-through.
Avoiding Common Pitfalls and Audit Triggers
In regulated industries like alcohol, I saw firsthand how a late registration or misfiled return could delay licensing or shut down distribution entirely. And it wasn’t fraud that got brands into trouble—it was small oversights that snowballed.
Sales tax works the same way. States expect businesses to take the lead, and when they don’t, it raises red flags. Many audits start with something minor: an expired registration, a missed filing, or a sales spike no one reported. From there, things escalate—fast.
The most common causes for audits we typically see include:
Triggering nexus and never registering
Relying on platforms to collect when they don't
Collecting tax but failing to remit it
Forgetting to file zero-dollar returns
Letting state registrations expire
Misunderstanding what triggers nexus
Some of these are simple fixes. Set reminders for quarterly filings. Keep detailed records. Don’t wait until the end of the quarter to check if you’ve triggered nexus in a new state—check regularly, especially during sales spikes.
Tax agencies aren’t looking for perfection. But they do expect consistency. A few proactive steps now can save you thousands in penalties later and keep your brand on track to scale.
Smart Compliance Scales With You
You didn’t start your brand to become a tax expert. But ignoring multi-state compliance can cost you time, money, and momentum later.
When you treat sales tax as a strategic function, you set your business up to scale cleaner and faster. At BBG, we help CPG founders do exactly that. We identify where you have nexus, set up the right tools for your size and stage, and manage the process so you can stay focused on growth.
If you’re not sure where you stand or think there might be gaps in your current setup, let’s talk.
