Does storing inventory in a 3PL warehouse create nexus?

Yes. Inventory stored in a third-party logistics (3PL) warehouse creates physical nexus in that state. It doesn’t matter that you don’t own the warehouse or that a third party operates it. What matters is that your inventory (your tangible goods) is physically located there. That’s enough to establish nexus under virtually every state’s sales tax law.

Why 3PL creates nexus the same way FBA does

Physical nexus exists when you have a real, tangible presence in a state. The most common triggers: offices, employees, and inventory. A 3PL warehouse holds your inventory in a state, your products are physically there. This is economically identical to owning a warehouse in the state from a nexus perspective.

The distinction that doesn’t matter: whether you control the facility, whether you pay rent, or whether the warehouse also holds other sellers’ inventory. Your property is in the state. That’s nexus.

What you’re required to do once you have 3PL nexus

Once your 3PL creates nexus in a state:

1. Register for a sales tax permit in that state
2. Collect sales tax on all taxable sales shipped into that state, from your website, Shopify, direct orders, and any other channels
3. File returns on the schedule the state assigns (annual, quarterly, or monthly based on volume)

Unlike FBA sellers who benefit from Amazon’s marketplace facilitator collection on Amazon transactions, 3PL sellers are typically shipping their own orders, all of which are their direct collection obligation.

The exposure risk for sellers who don’t know about 3PL nexus

3PL nexus is often discovered late, during a tax compliance review, an acquisition, or when a state sends a notice. Because the obligation started when the inventory first arrived (not when you learned about it), the backlog of uncollected tax can be significant, particularly if you’ve used the 3PL for years.

The standard remedy is a Voluntary Disclosure Agreement (VDA): most states offer this program, which allows you to come forward, pay back tax, and receive penalty abatement with a limited lookback period (typically 3 years). Self-disclosing through a VDA is almost always better than waiting to be audited.

What to do right now if you use a 3PL

Step 1: Identify every 3PL location you use. If you use a single 3PL provider with multiple warehouse locations (common), get the state breakdown from your provider. Ask for a list of all warehouse locations where your inventory has been held, with dates.

Step 2: Cross-reference against your current registrations. For every state with a 3PL location, check whether you have a sales tax permit. States where you have inventory but no registration are your exposure.

Step 3: Estimate the backlog. For each unregistered state, pull your sales into that state over the relevant period. This gives you a rough sense of the uncollected tax exposure.

Step 4: Consult a tax advisor before registering. Registering without a VDA in a state where you have backlog exposure can trigger retroactive assessment going back further than the VDA lookback window. A VDA first is usually the better path.

Step 5: Register and configure collection. Once the backlog is addressed, register in all states with 3PL nexus and configure your sales channels to collect.

Common 3PL nexus misconceptions

“It’s just a warehouse, not my business.” Doesn’t matter, your goods are there.

“The 3PL contract says they’re responsible for sales tax.” That clause refers to the 3PL’s own sales tax obligations, not yours as the seller. Your nexus is yours.

“We only started using this 3PL 6 months ago, there’s no real exposure.” Even 6 months of uncollected tax can be material depending on your sales volume. Don’t assume short duration means low exposure.

“We’re registered in the state where we ship from, not where the 3PL is.” Registration follows where you have nexus, not where you ship from. Nexus is in the warehouse state.