Sales Tax Nexus Frequently-Asked Questions

What does sales tax nexus mean?

Sales tax nexus refers to a business’s connection or presence in a particular taxing jurisdiction, which obligates the business to collect and remit sales tax on transactions within that jurisdiction.

How do I determine if my business has sales tax nexus?

Nexus can be established through various factors, including but not limited to physical presence, economic activity, and online sales. Conducting a sales tax nexus study can help identify the specific triggers that create nexus for your business.

Do online sales create sales tax nexus?

Yes, online sales can create nexus. Many states have economic nexus laws that consider the volume or value of online sales as a factor in determining whether a business has nexus in that state.

What is economic nexus?

Economic nexus is a concept where a business is deemed to have nexus based on its economic activity in a state, typically measured by sales revenue or transaction volume, without needing a physical presence. After the 2018 South Dakota v. Wayfair ruling, most states have implemented some form of economic nexus thresholds for remote sellers. On an annual basis, the case established that a business with over 200 transactions or $100,000 in sales into the state was enough to create a sales tax obligation.

Are nexus rules the same in every state?

No, each state has rules and criteria for establishing nexus. Understanding the specific regulations in each state where a business operates is crucial.