I ignored sales tax for 18 months. Then I got a $47,000 surprise.

In 2022, a founder I know received a compliance notice from the state of Texas. She'd been selling software online for about a year and a half. Growing fast. Reinvesting everything back into the product. Not thinking about sales tax because, honestly, why would she? She was building software. Digital. Intangible. That stuff isn't taxed, right?

Wrong.

The notice said she owed back taxes, interest, and penalties totaling just under $47,000. She hadn't done anything fraudulent. She'd just crossed a threshold she didn't know existed and kept crossing it, month after month, while the bill quietly compounded.

In 2018, the Supreme Court ruled in South Dakota v. Wayfair that states could require out-of-state sellers to collect sales tax even without physical presence. No warehouse. No employees. No office. If you sell enough into a state, that state can tax you. That's economic nexus.

Most states set their threshold at $100,000 in sales during the current or previous calendar year. Some also use 200 transactions as a trigger. A few require both. The ones that catch people most often: California at $500,000, Texas at $500,000 in the preceding 12 months, and New York at $500,000 AND 100 transactions.

If you sell on Amazon, those sales still count toward your threshold in most states, even though Amazon collects the tax. The moment you launch your own direct channel, you may already have an obligation you didn't see coming.

The $47,000 founder resolved it through voluntary disclosure and paid less than a third of the original amount. But she spent four months of founder time on it during what should have been her growth phase. That's the real cost.

If you're not sure where you stand, pull your sales by state and compare against each state's threshold. Takes an hour. Possibly saves you years of headache.