US states have the legal right to impose sales tax on businesses who aren’t based in their state. Based on the Nexus rules, if you meet certain criteria, your business will be obligated to register for sales tax and start charging the tax on your sales to that state.

But how will the local state ever know that you a) should be registered and b) have elected to ignore your obligations and evade the tax?

The simple answer is that it’s very unlikely they will find you. But hiding from the US government has never been a successful survival strategy, especially when they do have the following options if they do decide to hunt you:

Bots to scrape the Internet

In 2019, the German tax office developed bots that scraped the internet to identify the websites, marketplace merchants and tech companies who were making the most sales to their citizens. This project uncovered tens of thousands of non-compliant businesses, who were served with tax assessments and penalised.

Many US states have already developed similar technology, and it is not unreasonable to think they will continue to invest in such endeavours, since the proceeds they can recover from back taxes and penalties will make it worth their while.

Financial data shared by credit card and payment companies

Many banks and financial institutions share data with governments and fiscal authorities. In fact, some of the bigger players even provide this data in real time via API. It would not be difficult for tax offices to identify merchants who are established outside their state who are receiving material proceeds from citizens within their states.

Data shared by platforms and marketplaces

Marketplace facilitator rules in the USA have made companies like Amazon and Walmart responsible for registering and reporting all eligible sales to the local states. These laws also compel these companies to share relevant transactional data upon request. It is very likely this forced cooperation will be extended from marketplaces to eCommerce platforms like Shopify and WooCommerce.

Data shared by warehouses and fulfilment centres

If you store goods in a warehouse or fulfilment centre in a state, it is very likely the local company has already provided your company’s name to the local tax office. During audit and regular compliance reporting, these companies will be obliged to provide the list of their clients who store inventory on their premises.

Import data

The US government obviously has access to all import data – so they are certainly aware of any company who is importing goods into the USA. Similarly, many logistics companies will share information with tax authorities relating to the movement of goods between states in the USA. If you have a significant volume of inventory being delivered to a single state, it is probable that the tax office has your name already.

Enforcement squads using their own initiative

Tax offices have set up enforcement squads specifically for the purpose of investigating and identifying businesses who are not complying with the tax legislation. These teams will use their own experience, intelligence and technology that is available to them to come up with lists of possible offenders to scrutinise. They will follow trends, manually search the internet and check places like social media to identify the products not produced in their state that are popular and generating a lot of sales.


No one wants to pay taxes, but it’s a cost of doing business. The current economic climate makes tax revenue more important to governments than ever, so they will use every tactic at their disposal to identify tax evaders. It is crucial that you understand if you have any tax exposure in the USA – if you do, you can either stop selling to the states where you have liabilities, or it is very simple to regularise your tax position. (Including various amnesty options available to you to minimise penalties).

Contact Yonda today for a complimentary nexus assessment.