You Haven't Been Collecting Sales Tax.
Now What?

You're not alone. Most SaaS founders discover this problem during fundraising, an acquisition, or when a state sends a letter. The good news: it's fixable.

The Most Common Reasons This Happens

•"My accountant said software isn't taxable" (true in some states, not others)
•"I didn't know about economic nexus" (post-2018 Wayfair rules)
•"We're B2B, so it doesn't apply" (sometimes true, often not)
•"We're too small to matter" (until you cross the threshold)

None of these are stupid. The rules are genuinely confusing and change constantly.

Step 1: Assess the Damage

Before you do anything, you need to understand:

1.Which states you actually have nexus in (it might be fewer than you think)
2.Which of those actually tax SaaS (many don't)
3.How long you've had nexus in each state
4.How much of your revenue was actually taxable

Start Here

Our free analysis will tell you which states you have nexus in and whether SaaS is taxable there. Takes 3 minutes.

Check My Nexus Status

Step 2: Understand Your Options

Voluntary Disclosure Agreement (VDA) — Usually Best

Most states offer VDA programs for businesses that come forward before being caught. Benefits typically include:

• Limited lookback period (3-4 years instead of unlimited)
• Waived penalties (you only pay tax + interest)
• Structured payment plans if needed
• Amnesty from prosecution

If you have significant exposure, this is almost always the best option.

Just Register and Start Collecting

Some companies register without disclosing past liability. This is riskier:

• States can still audit you for past periods
• If audited, you won't get VDA benefits
• Creates a paper trail showing when you knew you had nexus

This can work if your exposure is small (under $10K) or you only recently crossed thresholds.

Do Nothing — Usually Wrong

Hoping they won't find you is rarely a good strategy:

• States share data with each other
• They buy data from payment processors and marketplace platforms
• The problem only gets bigger over time
• Due diligence (fundraising, M&A) will surface it eventually

The only time "do nothing" makes sense is if you genuinely don't have nexus.

Step 3: Estimate Your Exposure

A rough calculation to understand what you're dealing with:

Taxable revenue in state

× State tax rate (typically 4-8%)

× Years of exposure (capped at 3-4 for VDA)

+ Interest (typically 5-12% per year)

= Approximate liability

Example: $500K in Texas revenue over 3 years at 6.25% = ~$94K in tax, plus maybe $15K in interest. A VDA would eliminate the penalties (typically 10-25% more).

When to Get Professional Help

You can handle this yourself if your exposure is small and straightforward. Consider hiring a SALT (State and Local Tax) professional if:

Total exposure exceeds $50K
You have exposure in 5+ states
You're raising a round or preparing for acquisition
Your product has complex taxability (hybrid SaaS + services)

Start With Your Nexus Status

Before you can fix anything, you need to know where you actually have obligations. Our free tool checks 10 states in 3 minutes.