Looking for USA Tax Updates? Here Are 5 Things International Sellers Must Know Today

by Ariful | Mar 17, 2026 | US Updates

1. Prepare for the Section 122 Surcharge

The most significant shift in U.S. trade policy this year follows the Supreme Court ruling on February 20, 2026. The court determined that tariffs previously issued under the International Emergency Economic Powers Act (IEEPA) were invalid. In response, the U.S. government moved quickly to implement a new framework.

As of February 24, 2026, a Section 122 surcharge under the Trade Act of 1974 has replaced the old IEEPA tariffs. Currently, this surcharge is set at 10%, but it is expected to increase to 15% in the coming months. This surcharge applies to the vast majority of imported goods entering the United States.

What you must do:

• Update your landed cost models: Immediately factor in a minimum 10% surcharge for all U.S. imports.
• Audit your current inventory: Determine how this additional cost impacts your current pricing strategy.
• Stay alert for the 15% hike: This increase is expected to happen with little warning once the administrative transition is complete.

2. Manage the Complexity of Stacking Tariff Rates

The new Section 122 surcharge does not exist in a vacuum. It is an “additive” tax, meaning it stacks on top of existing trade barriers. If your products were already subject to Section 232 (steel and aluminum) or Section 301 (China-specific) tariffs, you are now facing multiple layers of duties.

This stacking effect significantly increases the compliance burden for international sellers. U.S. Customs and Border Protection (CBP) systems are currently being updated to handle these complex calculations. During this transition, incorrect tariff coding is a high risk.

Why this matters for your compliance:

• Avoid costly corrections: If your customs broker uses outdated codes, you may face retroactive bills or penalties once the CBP systems are fully synchronized.
• Calculate for the “Worst Case”: We recommend modeling your margins under both the 10% and 15% scenarios to ensure your business remains viable regardless of sudden rate hikes.
• Maintain precise records: As part of your ongoing international bookkeeping, keep every customs entry form organized for potential audits.

3. Account for Continued Suspension of Duty-Free Exemptions

For years, many e-commerce sellers relied on the “de minimis” threshold, which allowed low-value shipments (under $800) to enter the U.S. duty-free. However, the suspension of these minimum duty-free allowances remains in full effect in 2026.

This means that even small, individual parcels sent directly to consumers are now subject to the same Section 122 surcharges and tariffs as bulk shipments. This change has fundamentally altered the direct-to-consumer (DTC) model for international brands.

Take these steps to protect your margins:

• Notify your customers: Ensure your checkout process clearly explains who is responsible for these duties to avoid “package refusal” at the border.
• Consider bulk warehousing: Moving goods in larger quantities to a U.S.-based fulfillment center may allow for more predictable duty management compared to thousands of individual small-package entries.
• Use a VAT calculator for global sales: If you sell across multiple regions, use tools to see how different tax environments compare to the current U.S. situation.

4. Align with Global VAT and GST Registration Trends

While the U.S. focuses on surcharges and sales tax, the rest of the world is following suit with digital and physical goods taxation. More than 100 countries now require foreign sellers to register for VAT or GST when serving local consumers.

The U.S. “Economic Nexus” rules for sales tax are becoming the global blueprint. If you are selling into the U.S., you likely have obligations in other major markets too. For instance, Turkish sellers or European brands expanding into the U.S. must often manage parallel compliance tracks.

Stay compliant across borders:

• Monitor Nexus thresholds: In the U.S., each state has different rules (often $100,000 in sales or 200 transactions) that trigger sales tax registration.
• Expand with confidence: If you are also looking at European markets, ensure you understand specific rules for different jurisdictions.
• Consolidate your filing: Don’t manage ten different logins for ten different tax authorities. A Global Tax Compliance Suite brings your U.S. Sales Tax and international VAT/GST filings into one managed workflow.

5. Review Incoterms to Determine Tariff Liability

Who pays the new 10-15% Section 122 surcharge? The answer lies in your Incoterms (International Commercial Terms). This is the “fine print” that determines whether the seller or the buyer is legally responsible for duties and taxes at the border.

If you are selling under DDP (Delivered Duty Paid) terms, you are responsible for the Section 122 duties. If you haven’t raised your prices to reflect the new 10% surcharge, that cost comes directly out of your profit. Conversely, under DAP (Delivered at Place) or FOB (Free on Board), the buyer or importer of record bears the cost.

Actionable instructions for sellers:

• Reassess supplier contracts: Review your agreements with manufacturers and freight forwarders.
• Adjust pricing strategies: If you keep DDP terms to provide a better customer experience, you must increase your retail price to cover the 10-15% surcharge.
• Consult with experts: Determining the right Incoterm is a balance between customer satisfaction and financial risk. This is why having a compliance partner is essential.

Your 2026 USA Tax Compliance Checklist

To help you stay organized, here is a quick checklist of what you should be doing this week:

• Check your HS Codes: Ensure your product classifications are accurate to avoid overpaying on the new surcharges.
• Review Sales Volume: Identify which U.S. states require sales tax registration based on your current sales thresholds.
• Audit Incoterms: Confirm whether you are selling DDP, DAP, or FOB, and adjust your pricing if necessary.
• Update your cost models: Factor in the 10% Section 122 surcharge minimum, and model for a 15% scenario.
• Register for Global Compliance: If you sell internationally, document your VAT/GST obligations in each country where you have nexus.

The Ultimate Guide to 2026 USA Tax Updates: Everything International Sellers Need to Succeed

by Ariful | Mar 17, 2026 | US Updates

The 2026 Tariff Revolution: Goodbye IEEPA, Hello Section 122

The most critical update for 2026 stems from a February 20th Supreme Court ruling that fundamentally changed how the U.S. imposes tariffs. The Court declared that many tariffs previously imposed under the International Emergency Economic Powers Act (IEEPA) were invalid. While this sounds like a win, the replacement system is complex and requires immediate attention.

Navigate the New Section 122 Import Surcharge

Effective February 24, 2026, the US government replaced legacy IEEPA tariffs with a new Section 122 import surcharge. This is not a simple name change; it is a structural shift in how your goods are taxed at the border.

• The Current Rate: Most imported goods now face a 10% surcharge.
• The Future Outlook: There are already plans to escalate this to the statutory maximum of 15%.
• The Cumulative Effect: This surcharge applies in addition to existing Section 232 (steel/aluminum) and Section 301 (China-specific) tariffs.

Action Item: You must immediately recalculate your landed costs. If you are operating on thin margins, a 10% to 15% additional surcharge could turn a profitable SKU into a loss-leader overnight. For those needing help with these complex numbers, advanced financial forecasting is essential to model these various surcharge scenarios.

Protecting Your Margins: Incoterms and Pricing Adjustments

With the introduction of the Section 122 surcharge, who pays the bill becomes a matter of contract law. Your choice of Incoterms (International Commercial Terms) will determine whether your business or your customer absorbs these new costs.

Review Your Shipping Contracts Immediately

If you are selling under DDP (Delivered Duty Paid), you—the seller—are responsible for the new surcharges. If you haven’t adjusted your retail prices since February 24, you are currently eating that 10% cost.

Conversely, if you sell under DAP (Delivered at Place) or FOB (Free on Board), the buyer typically bears the duty. However, unexpected 10-15% charges at the point of delivery often lead to refused packages and customer dissatisfaction.

Our Recommendation:

1. Audit your HS Codes: Ensure your customs broker is using the correct Section 122 classifications to avoid overpayment or penalties.
2. Renegotiate Terms: If possible, move away from DDP for high-value shipments to share the tax burden.
3. Country-Specific Pricing: Consider implementing dynamic pricing for US customers to reflect the increased cost of entry.

Income Tax and the New Digital Remittance Fee

For founders and expat business owners, 2026 brings both a bit of relief and a new hurdle.

Higher Foreign Earned Income Exclusion (FEIE)

For the 2026 tax year, the FEIE has increased to $132,900. When combined with the standard deduction, many qualifying international founders can exclude roughly $149,000 of foreign earnings from US federal income tax. This is a significant planning opportunity if you are structured correctly.

The 1% International Remittance Fee

Starting January 1, 2026, a new 1% federal fee applies to certain international remittances sent from the US. This policy is designed to capture revenue from non-digital or cash-based transfers.

How to avoid it: The IRS is heavily incentivizing digital, bank-to-bank transfers. To maintain healthy cash flow management, ensure your profit repatriation strategy utilizes fully digital, transparent funding methods. Using legacy cash-transfer services will now cost you an automatic 1% off the top.

IRS AI Enforcement: The End of “Invisibility”

If you’ve historically relied on the complexity of international tax law to stay “under the radar,” 2026 is the year that strategy fails. The IRS has fully integrated AI systems that cross-reference digital bank transfers, customs data, and marketplace reporting in real-time.

Mandatory Compliance for International Entities

The IRS has made it clear: filing is mandatory even if no tax is owed. Automated systems now flag inconsistencies between what you report to customs and what you report on your income tax returns.

• Digital Footprints: Every transfer over $600 is now visible to IRS algorithms.
• Audit Risk: The chance of an automated audit has increased fourfold for international sellers since 2024.
• Zero Tolerance: Late filings for foreign-owned LLCs (such as Form 5472) continue to carry massive penalties starting at $25,000.

To understand how to protect your business from these automated flags, read our guide on how to survive IRS audits in the USA.

State-Level Updates: Nexus and Amnesty

While the federal government focuses on tariffs and AI, individual states are getting aggressive with Sales Tax and Income Tax Nexus.

2026 Tax Amnesty Programs

Several states, including Illinois, have launched Voluntary Disclosure Programs (VDP) or tax amnesty windows in 2026. If you realized you have had a “Nexus” (a physical or economic presence) in a state but haven’t been collecting sales tax, now is the time to act.

• Illinois Warning: Illinois is applying a higher “default” tax rate to transactions where location information is missing.
• Amnesty Benefits: Participating in a VDP usually waives penalties and limits the “look-back” period to 3-4 years, rather than the entire history of the business.

Your 2026 USA Tax Compliance Checklist

To ensure your business stays compliant and profitable this year, follow this structured approach:

1. Recalculate Landed Costs: Factor in the 10% Section 122 surcharge for all imports arriving after February 24, 2026.
2. Verify Customs Entries: Check with your customs broker that legacy IEEPA codes have been removed to avoid double taxation.
3. Update Digital Transfer Methods: Switch all profit repatriations to digital bank transfers to avoid the 1% remittance fee.
4. Review FEIE Eligibility: If you are a US citizen abroad, ensure your 2026 salary is optimized for the $132,900 exclusion.
5. Audit State Nexus: Check your trailing 12-month sales in key states like California, Texas, and New York to see if you have triggered any filing requirements.
6. File All Forms on Time: Ensure Form 5472, FBAR, and FATCA disclosures are filed by their respective deadlines to avoid penalties.
7. Consult a Tax Professional: 2026 is too complex to navigate alone. A specialist in international business taxation can save you thousands in overpayment and penalties.

USA Sales Tax Nexus Explained in Under 3 Minutes (March 2026 Update)

by Ariful | Mar 17, 2026 | US Updates

The 3-Minute Cheat Sheet: Nexus in 2026

Don’t have time for a deep dive? Here is the essential breakdown:

1. Physical Nexus: If you have an office, an employee, or inventory (like in an Amazon FBA warehouse) in a state, you have Nexus. Period.
2. Economic Nexus: If you sell over a certain dollar amount (usually $100,000) or a certain number of transactions into a state, you have Nexus: even if you’ve never set foot there.
3. The 2026 Simplified Rule: More states (like Alaska and Utah) have recently ditched the “200 transactions” rule. They now only care about your total sales revenue.
4. Registration is Mandatory: Once you hit Nexus, you must register for a Sales Tax Permit before you start collecting tax.
5. International Sellers are NOT Exempt: Being based in the UK, Europe, or China does not protect you from US state tax laws.

Physical Nexus: The “Hidden” Trap for FBA Sellers

Physical Nexus is the traditional form of tax connection. It is triggered by having a tangible presence in a state. For most modern digital businesses, this isn’t about having a shiny office on Wall Street; it’s about where your stuff is kept.

If you utilize third-party logistics (3PL) or Amazon FBA, your inventory is spread across multiple states. Every state where your inventory is stored constitutes a Physical Nexus. This is why many international sellers find themselves needing to register for sales tax in the USA in ten or more states simultaneously.

Common Physical Nexus Triggers:

• Inventory: Stocking products in a warehouse (owned or 3PL).
• Personnel: Having remote employees, contractors, or even sales reps traveling through a state.
• Affiliates: Using people in a state to advertise your products in exchange for a cut of the profits.
• Trade Shows: Attending and selling at events in certain states can trigger temporary Nexus.

Economic Nexus: The 2026 Regulatory Landscape

Economic Nexus is a newer concept, born from the 2018 Wayfair vs. South Dakota Supreme Court decision. It allows states to tax businesses based solely on their economic activity within the state.

As of March 2026, almost every state with a sales tax has an Economic Nexus law. However, the “thresholds”: the point at which you are forced to comply: are changing.

Major Updates for 2025-2026

Recent legislative sessions have seen a trend toward simplification. States realized that tracking transaction counts (e.g., the “200 transactions” rule) was a nightmare for small businesses and tax authorities alike.

• Alaska (Remote Seller Sales Tax Commission): Effective January 1, 2025, the 200-transaction trigger was eliminated. Now, you only trigger Nexus if your sales exceed $100,000 in the state.
• Utah: Following Alaska’s lead, Utah repealed its transaction-based trigger on July 1, 2025. Compliance is now strictly based on the $100,000 sales threshold.
• The “Big Three” Thresholds: California, Texas, and New York remain at a high $500,000 threshold. If you are a growing SME, you might find you hit Nexus in smaller states with $100,000 limits long before you hit the “Big Three.”

Why International Sellers Often Get It Wrong

Many international entities: from UK Limited companies to Australian PTYs: assume that US Sales Tax doesn’t apply to them because they are “foreign.”

This is a dangerous misconception. The US does not have a national VAT system. Instead, it has over 11,000 local taxing jurisdictions. State departments of revenue are increasingly aggressive in identifying non-compliant international sellers.

If you exceed a threshold and fail to register, you are still liable for the tax you should have collected. This comes out of your profit margin, plus hefty penalties and interest. For many, this is the difference between a successful expansion and a total financial loss.

The Compliance Checklist: 4 Steps to Safety

Staying compliant doesn’t have to be a full-time job if you follow a structured approach.

1. Nexus Study

You cannot fix what you don’t measure. You must analyze your trailing 12 months of sales by state. Identify where you have inventory and where your sales volume is approaching state thresholds ($100k is the standard “danger zone”).

2. Registration

Do not collect tax without a permit. It is illegal to charge “Sales Tax” to a customer if you aren’t registered with the state to remit it. Ensure all “Doing Business As” (DBA) and entity details are correct during the registration process.

3. Collection Settings

Once registered, you must update your sales channels (Amazon, Shopify, Walmart, etc.) to begin collecting the correct tax rates from customers.

4. Ongoing Filing

Collection is only half the battle. You must then file returns: monthly, quarterly, or annually: depending on your volume. This requires consistent execution of filings based on your sales data.

Frequently Asked Questions (FAQ)

What is the most common sales tax threshold?

Most states use a threshold of $100,000 in gross sales. While many previously used 200 transactions as a secondary trigger, recent legislative changes in Alaska (effective January 1, 2025) and Utah (effective July 1, 2025) have eliminated transaction-based thresholds in favor of sales-only calculations.