US Sales Tax Nexus for Canadian E-Commerce Sellers establishes that FBA inventory creates physical nexus the moment it lands in an Amazon warehouse, with no sales threshold to cross first. This guide goes further into the FBA-specific mechanics: how to find out which states actually hold a seller’s inventory, why that list changes without the seller doing anything, and what a seller does with that information once they have it.
The Seller Does Not Choose the Warehouse
A seller shipping inventory into Amazon’s fulfillment network sends it to one or a small number of inbound warehouses. Amazon’s own logistics system then redistributes that inventory across its wider network based on projected regional demand, without the seller selecting or approving each destination. A single shipment can end up split across warehouses in half a dozen states within days of arrival.
This distribution model is the core reason FBA nexus exposure differs from a seller running their own warehouse or using a single third-party logistics provider. A seller with one 3PL warehouse in one state has nexus in that one state. An FBA seller with the same total inventory volume commonly has nexus in ten or more states simultaneously, purely because of how Amazon’s network operates.
Finding Where Inventory Actually Sits
Amazon provides an Inventory Event Detail report and a Daily Inventory History report inside Seller Central that show which fulfillment centers have held a seller’s stock over a given period. The FBA Inventory Reports available in Seller Central are the primary source for confirming actual state-by-state inventory placement, rather than assuming placement based on where a seller’s own business is based or where the inbound shipment was sent.
This report should be pulled and reviewed periodically, not once. Amazon’s redistribution is ongoing: a state with inventory this quarter can have none next quarter, and a new state can appear that had never held stock before. A seller who checked their FBA nexus footprint a year ago and has not checked since is working from a stale list.
Why the List Changes Without Any Action
Sellers sometimes assume nexus exposure is something they create through a decision, choosing to expand into new states, adding a new SKU, or increasing ad spend. FBA nexus does not work that way. Amazon can reroute inventory to a new fulfillment center in response to demand forecasting, warehouse capacity changes, or new fulfillment center openings, all without the seller changing anything about how or what they sell.
This means a seller’s nexus footprint should be treated as something to monitor on a recurring basis, similar to a payout or settlement reconciliation, rather than a one-time determination made when FBA is first set up. Amazon Settlement Report Reconciliation covers the recurring reconciliation habit for the financial side of FBA activity; inventory placement review is the parallel habit for the sales tax side.
What Physical Nexus Actually Triggers
Having inventory in a state generally creates the state’s threshold for requiring registration, independent of whether any sales tax ends up owed after marketplace facilitator collection. Amazon collects and remits sales tax on marketplace transactions in states with facilitator legislation, as described in US Sales Tax Nexus for Canadian E-Commerce Sellers, but facilitator collection does not always eliminate the underlying registration requirement created by physical presence.
A seller with FBA inventory in a state, and no other activity there beyond marketplace sales Amazon already collects tax on, can still be expected to register and file in that state, filing a return showing marketplace-collected tax and no seller-remitted amount. The filing obligation and the payment obligation are separate questions, and physical nexus from FBA inventory tends to answer the first one before facilitator collection resolves the second.
Building a Standing Review Process
The practical response to FBA’s shifting inventory footprint is a standing check, not a one-time nexus study. A seller should pull the FBA inventory placement report on a recurring schedule, compare the current state list against the states already registered in, and flag any new state appearing in the report for a registration review before it accumulates a filing gap.
This is the same operating discipline behind Month-End Close Checklist for Marketplace Sellers: a recurring check catches drift early, while a once-a-year lookback finds problems only after they have compounded across multiple periods.
Common Mistakes
Reviewing nexus once and treating it as settled. FBA inventory placement changes on Amazon’s schedule, not the seller’s. A nexus review from a year ago does not reflect the current footprint.
Assuming marketplace facilitator collection means no state involvement at all. Facilitator collection addresses the tax remittance on marketplace sales. It does not automatically remove a state’s registration requirement created by inventory physically present in that state.
Confusing the inbound shipment destination with actual inventory placement. The state a seller ships inventory into is not necessarily where Amazon ultimately stores it. The Inventory Event Detail and Daily Inventory History reports, not the inbound shipping plan, show where inventory actually sat.
Treating low-volume states the same as no-nexus states. A state where only a small quantity of inventory sat briefly is still a state where physical nexus existed. Volume affects economic nexus thresholds; it does not change whether physical presence occurred.
Related Guides
- US Sales Tax Nexus for Canadian E-Commerce Sellers covers the broader physical and economic nexus framework this guide builds on.
- Amazon Settlement Report Reconciliation covers the recurring reconciliation habit for FBA payout and fee data.
- Month-End Close Checklist for Marketplace Sellers covers the standing operational rhythm this kind of nexus monitoring fits into.
Scope of This Guide
This guide covers how FBA inventory distribution creates and changes state-level physical nexus for Canadian sellers, and how to monitor it using Amazon’s own inventory reports. It does not cover:
- State-by-state sales tax registration procedures
- Economic nexus threshold tracking across direct sales channels
- Voluntary disclosure program mechanics for existing unregistered exposure
The authoritative source for inventory placement data is Amazon Seller Central’s FBA Inventory Reports.
If you have not pulled an FBA inventory placement report recently, or have never checked which states your inventory has actually moved through, that is worth confirming before assuming your nexus footprint matches what it was when you started selling on Amazon.
Get in touch to review your FBA inventory footprint and state nexus exposure.