What was broken
A consumer electronics distributor operating across eight jurisdictions had expanded rapidly without upgrading its finance and compliance systems. Indirect-tax registrations were active in multiple jurisdictions, but return filings, reconciliations, and input-tax-credit claims had become inconsistent. Notices from several tax authorities began arriving simultaneously, creating uncertainty around tax liabilities and vendor relationships.
What we did
CapEasy assembled a dedicated indirect tax team to review compliance across every registration. The team reconciled purchase and sales data, corrected historical return mismatches, responded to the notices, and implemented standardized compliance processes across all operating jurisdictions. The business was also provided with a centralized compliance dashboard for future monitoring.
Where it landed
The company resolved its outstanding compliance issues without major business disruption and significantly improved the accuracy of future indirect-tax reporting. Management gained a unified compliance framework capable of supporting continued nationwide expansion.
The US version of "registered in eight states": economic nexus
The originating engagement taxed this distributor jurisdiction by jurisdiction because indirect tax is a destination-based tax collected at the local level once you are registered there. The US runs on a different mechanism but lands an ecommerce seller in the same position: a patchwork of state sales tax obligations that grows every time revenue crosses a new line, whether or not the business ever opens an office or holds inventory in that state.
That mechanism is economic nexus. Before June 2018, a state could generally only require a business to collect its sales tax if the business had a physical presence there — a store, an employee, a warehouse. In South Dakota v. Wayfair, Inc., the Supreme Court held that physical presence was no longer the constitutional floor: a state can require an out-of-state seller to collect its sales tax once the seller's economic activity in that state crosses a threshold the state sets, with no store or staff required. South Dakota's own law — the one the Court reviewed and did not strike down — set that line at $100,000 in sales or 200 separate transactions into the state in a year. Every state that taxes retail sales has since written its own version of that threshold into its statute.
The threshold is set state by state — and it is not the same everywhere
This is the part that turns "one indirect tax across eight jurisdictions" into "sales tax across fifty jurisdictions": each state legislature picked its own number, and the numbers do not match. Texas and California both use a $500,000 threshold measured on total sales into the state, with no separate transaction count. New York requires crossing both tests at once — more than $500,000 in gross receipts and more than 100 transactions in the same look-back period — so a seller with high average order value but low order count can trip one test and not the other. A business selling into a dozen states is not answering one question; it is running a dozen separate calculations against a dozen separate rules, each on its own measurement window.
Marketplace sales complicate the count further. Selling through Amazon, Walmart Marketplace, or a similar platform does not automatically remove those sales from a state's nexus math — whether marketplace-facilitated sales count toward the seller's own threshold is set state by state, and it splits both ways: New York includes them, while a number of other states exclude a seller's marketplace volume from that seller's own threshold even though the marketplace, not the seller, collects and remits the tax on them. Getting this wrong in either direction — assuming marketplace sales are excluded everywhere, or assuming they are excluded nowhere — is exactly the kind of state-by-state inconsistency that produced the notices in the engagement. The rule has to be checked per state, not assumed once and applied everywhere.
The fix is the same discipline, not a different one
The engagement did not resolve eight separate crises with eight separate fixes. It reconciled purchase and sales data against every registration, corrected the mismatches in the historical filings, and replaced ad hoc handling with one standard process and one dashboard the business could monitor going forward. That is the same shape of work a multi-state ecommerce seller needs before the notices arrive, not after: sales tracked and reconciled by ship-to state, a schedule showing where each state's threshold stands against the current rolling or calendar-year window that state uses, and a single calendar for registration deadlines and filing due dates once a threshold is crossed.
CapEasy's part in that work is the reconciliation, the schedule, and the monitoring — turning sales data spread across states and channels into one ledger a seller and their advisors can trust. Registering in a new state, filing the resulting sales tax returns, and any position taken on how a specific state's statute applies to a specific product or transaction run through the partner CPA firms we work with across the states where our clients operate.
What to take from it
- Physical presence stopped being the test in 2018 — economic nexus means a state can require collection the moment your sales into it cross that state's threshold, no store or staff required.
- There is no single national number: thresholds, look-back windows, and whether both a dollar and a transaction test apply are set state by state, and states change them without a shared calendar.
- Whether marketplace-facilitated sales count toward your own nexus threshold is set state by state and splits both ways — check this per state rather than assuming one answer everywhere.
- The fix that works is the same one that worked across eight indirect-tax registrations: one reconciled ledger by jurisdiction, a schedule showing where each threshold stands, and a single monitoring calendar — built before the notices, not after.