Introduction
Are you a non-U.S. resident running a Shopify store with U.S. customers? If so, sales tax in 2025 is one of the most misunderstood and most overlooked obligations for international sellers.
Shopify gives you global access, but U.S. states have their own sales tax rules, nexus thresholds, and filing requirements. If you’re not collecting and remitting properly, your business could face penalties, audits, or forced collection down the road.
This guide breaks down how to manage sales tax as a foreign seller on Shopify, what “economic nexus” means, and how to stay 100% compliant in 2025.
IRS Tax Code References
Note: U.S. sales tax is state-level, not federal. However, your federal filings may include related income disclosures.
- IRC §6001 – Recordkeeping requirement for sales and tax filings
- IRC §6050W – 1099-K reporting of Shopify payments
- IRC §871 – U.S. tax rules for non-resident income (for income tax, not sales tax)
Relevant Forms & State Requirements
- State Sales Tax Permit Applications – Required if you have nexus in a state
- Sales Tax Returns – Filed monthly, quarterly, or annually per state
- Form W-8BEN or W-8BEN-E – Declare non-resident status for federal withholding
- Form 1099-K – Issued by Shopify if sales exceed $600
- Foreign Tax ID Number (FTIN) – May be required during registration
Example: Non-U.S. Seller With U.S. Sales Tax Nexus
Example: Meera, an Indian resident, sells planners and journals through Shopify to customers in the U.S.
In 2024:
- She made $120,000 in U.S. sales, mostly to California and New York
- Despite no physical U.S. presence, she triggered economic nexus in both states
- She registered for sales tax permits, set up Shopify to collect state sales tax, and used TaxJar for automatic filings
Tax Summary:
- Registered in CA and NY
- Shopify collected and reported tax at checkout
- Meera filed quarterly returns using TaxJar
- She received a Form 1099-K for gross income, filed Form W-8BEN, and didn’t owe U.S. federal income tax due to lack of permanent establishment
Step-by-Step Guide for Sales Tax Compliance (Shopify + Non-U.S. Seller)
- Understand Economic Nexus Thresholds
Many U.S. states require sales tax registration if you:
- Exceed $100,000 in sales or
- Have 200+ separate transactions shipped into that state (e.g., CA, NY, TX)
Check each state’s current 2025 thresholds.
- Determine Where You Have Nexus
Run a state-by-state analysis of customer shipping addresses. If you meet the economic threshold, you are legally required to register and collect sales tax. - Register for State Sales Tax Permits
You can register online with the state’s Department of Revenue. You’ll need:
- Passport or FTIN
- Foreign business address
- Form W-8BEN or W-8BEN-E (for Shopify/Stripe/PayPal)
- U.S. mailing agent or Registered Agent (in some states)
- Configure Shopify to Collect State Sales Tax
In Shopify Admin:
- Go to Settings > Taxes > Manage Sales Tax
- Add your registered state(s)
- Shopify will automatically collect sales tax at checkout based on the buyer’s location
- Use Tax Automation Software
Tools like TaxJar, Avalara, or Sovos help file state sales tax returns automatically, track nexus, and avoid late filing penalties. - File State Sales Tax Returns On Time
Each state has different filing frequencies: monthly, quarterly, or annually. File even if there’s no tax collected that period to avoid penalties. - Keep Sales Tax Separate from Revenue
Sales tax collected is not your income. Keep it in a separate ledger or bank account to avoid spending what you must remit. - Understand Marketplace Facilitator Rules
If you sell through Amazon or Etsy in addition to Shopify, those platforms often collect and remit tax on your behalf. But Shopify does not you must handle it manually. - Reconcile Collected Tax Monthly
Match what Shopify reports as “tax collected” to what you owe by state. Fix any undercollection settings ASAP. - Maintain Audit-Ready Records
Keep digital copies of:
- Tax permits
- Tax filings
- Customer invoices
- Shopify reports
- Nexus evaluations
Conclusion
Non-U.S. residents selling to U.S. customers via Shopify must play by U.S. state tax rules no matter where they’re based. Economic nexus laws make it clear: you don’t need to be in the U.S. to owe U.S. sales tax.
By registering where required, configuring Shopify correctly, and automating returns, you stay compliant, build trust, and avoid costly penalties.
Call to Action
Unsure where you have nexus or how to set up your Shopify store for U.S. sales tax as a foreign seller?
Book a consultation with Anshul Goyal, CPA, EA, FCA
Anshul is a cross-border tax expert who has helped hundreds of non-U.S. residents:
- Register for sales tax in the right states
- Set up Shopify to collect legally
- File sales tax returns from overseas
- Avoid double taxation and IRS issues
- Stay compliant while scaling globally
Book now: https://calendly.com/anshulcpa/
Sell globally. File locally. Stay compliant.
About Our CPA
Anshul Goyal, CPA, EA, FCA
Anshul brings 15+ years of U.S. and international tax experience. He specializes in helping online sellers, foreign founders, and U.S. residents with IRS and multi-state compliance. Known for his deep knowledge in Shopify and Amazon seller tax strategy, Anshul has helped hundreds of entrepreneurs minimize taxes and scale legally.
Disclaimer
This blog is for informational purposes only and does not constitute legal or tax advice. Please consult a qualified tax professional regarding your individual tax situation.
Top 5 High-Searched FAQs for 2025
1. Do I need to collect U.S. sales tax as a non-resident?
Yes, if you exceed economic nexus thresholds in certain U.S. states.
2. Does Shopify collect U.S. sales tax for me automatically?
No. You must register in each state and configure Shopify to collect tax.
3. Do I owe U.S. income tax as a non-resident Shopify seller?
Not unless you have a U.S. trade or business or permanent establishment. Use Form W-8BEN to claim exemption.
4. What if I don’t file state sales tax returns?
You may face penalties, interest, and even collection action. Many states require filing even with zero tax due.
5. Can I automate state tax filings as a non-resident?
Yes. Use tools like TaxJar or Avalara that support international sellers.