Can I just start collecting sales tax going forward without addressing past exposure?

Start collecting going forward, today, if you haven’t already. But starting to collect doesn’t eliminate what you owe for the periods you missed. Those are two separate problems and they require two separate solutions.

What going-forward collection solves

When you register in a state and start collecting sales tax, you stop accumulating new liability from that date forward. Every taxable sale in that state from your registration date on is handled correctly: tax is collected from the buyer and remitted to the state.

This is necessary and should happen immediately. The sooner you stop adding to your exposure, the better.

What going-forward collection doesn’t solve

The periods before your registration date are unchanged. If you had nexus in Colorado starting two years ago but only registered today, you have two years of uncollected Colorado sales tax liability sitting in the past. Colorado can still assess it.

Starting to collect doesn’t:

• Eliminate the prior-period liability
• Start a statute of limitations clock on those unfiled periods (in most states, the clock only runs from filed returns)
• Prevent a state audit from reaching back to your actual nexus start date
• Remove your name from any marketplace-sourced data states use to identify non-compliant sellers

The registration date problem

Here’s the practical issue with registering now without addressing the past: your registration date is a public record in the state’s system. It marks the moment you acknowledged your obligation. If your actual nexus began years earlier, that gap is visible.

When a state runs a compliance audit and pulls your account, they see: “This seller has been registered since [your registration date].” If their marketplace data, 1099-K records, or purchase information suggests you were selling into the state before that date (which it often does) the prior period becomes the focus of the audit.

Registering late without addressing the prior exposure doesn’t hide the problem. It documents the starting point of your compliance while leaving the prior gap open.

Why the past won’t go away on its own

Some sellers assume that if they simply start complying and nothing happens for a year or two, the past liability will quietly expire. In most cases, it won’t:

• For unfiled periods, the statute of limitations doesn’t run in most states, there’s no filed return to trigger the clock
• States receive 1099-K data from Amazon and other platforms annually, which they compare against their seller registries
• States share taxpayer information with each other in some cases
• Economic nexus analysis has become more systematic; states are actively identifying sellers who crossed thresholds but didn’t register

The exposure doesn’t disappear. It either gets resolved proactively on favorable terms, or it gets discovered on the state’s terms.

The right sequence

1. Register and start collecting in all current nexus states now. Don’t wait for the prior-period issue to be resolved.
2. Assess your prior-period exposure. For each state where you have nexus, determine when it started and estimate the uncollected liability.
3. Choose a resolution path for the prior periods. A VDA if the exposure is significant; direct retroactive payment if it’s small and bounded. The MTC multi-state VDA program covers multiple states in a single application.
4. Close the prior period under the agreed terms. VDA accepted, returns filed, payment made, liability settled.

You can run steps 1 and 2–4 in parallel. Starting to collect doesn’t have to wait for the prior-period resolution to be complete, but the prior period still needs to be addressed.

Related: I haven’t been collecting sales tax — what do I do now? | Can a VDA protect me from penalties and interest on past-due taxes?