If you sell into the United States, you are dealing with one of the most fragmented consumption tax systems in the world.
This is not because sales tax is inherently complex.
It is because of how the system is structured.
The U.S. does not have a national sales tax. Instead, sales tax is administered at the state level, with additional layers imposed by counties, cities, and special taxing districts. Today, there are 46 separate state sales tax regimes and more than 12,000 unique taxing jurisdictions.
Each jurisdiction can independently determine:
What is taxable
What is exempt
How tax is calculated
When tax must be collected
How and when returns must be filed
Rates are not the real problem. Rates are relatively easy to automate.
The real problem is lack of uniformity.
A product that is taxable in one state may be exempt in another. Shipping may be fully taxable, partially taxable, or exempt depending on the destination. Digital goods, SaaS, services, and bundled transactions are all treated differently across states, often with subtle distinctions that materially affect compliance. Sales tax exemption forms are handled differently across states.
There is also no centralized administration.
Businesses must register, file, remit, and respond to notices separately in every state where they are required to collect tax. Each state operates its own portal, uses its own forms and terminology, and enforces compliance differently.
Globally, this is unusual.
Most countries administer consumption taxes at the national level. Even when rates vary by region, the underlying rules are consistent. Businesses learn one system and apply it everywhere.
In the U.S., remote sellers must learn dozens.
This structural complexity existed long before e-commerce. But it became unavoidable after the 2018 Supreme Court decision that expanded states’ authority to require sales tax collection from out-of-state sellers.
If you want historical context on how we got here, I’ve written about that separately in A Brief History of U.S. Sales Tax. What matters today is this: the system small businesses are expected to comply with was never designed for modern interstate commerce.
Sales tax complexity is not about rates. It is about fragmentation, inconsistent rules, and decentralized enforcement.
Understanding this structural reality is the foundation for every sales tax decision that follows.
