Cross-Border Tax — Canada to US

Your business is moving south. Maybe you're already selling to US customers and the volume is growing. Maybe you have a US sales representative, a US distributor, or you've started attending US trade shows and meeting with prospects on American soil. Maybe you've crossed revenue thresholds in multiple states without knowing thresholds exist.

The US tax system has rules for exactly this situation — and they apply whether or not you knew they did. The most common mistake Canadian businesses make when entering the US market is treating it as a sales and legal decision, without recognizing that it is also a tax decision across multiple overlapping systems: federal income tax, state income tax, state sales tax, and the treaty framework that sits above all of them.

The Canada–US tax treaty provides meaningful protection for Canadian businesses operating in the US — but only if the activity stays below the threshold that creates a permanent establishment, and only if the treaty position is correctly identified and claimed. Below that threshold, the treaty protects the Canadian business from US federal corporate income tax. Above it, the US expects a return.

State-level rules are entirely separate — 45 states have enacted economic nexus rules since the Supreme Court's 2018 Wayfair decision, and most apply to Canadian sellers regardless of physical presence. The interaction between these systems is where expensive mistakes get made.

We assess your US tax exposure from first principles — starting with your actual US activity and working through the full system. We determine whether your US operations have created a permanent establishment under the Canada–US treaty. We map your state-level economic nexus exposure — which states you've crossed thresholds in, what you owe, and how far back the clock has been running.

We design the structure for your US operations — US subsidiary, branch arrangement, or properly documented treaty-protected sales presence — so the US activity is organized correctly from the start.

For businesses with existing uncollected state sales tax obligations, we manage the voluntary disclosure process, which when done proactively caps the lookback period and typically eliminates penalties entirely.