Nexus (Tax Nexus)
The connection between a business and a state or country significant enough to require it to collect and remit sales tax there.
In practice
Nexus can be triggered by a physical presence (an office, warehouse, or employee) or, in most US states now, by exceeding a sales or transaction threshold in that state even without any physical footprint - known as economic nexus.
A business with no offices in a state still crosses that state's $100,000 economic nexus threshold through online sales alone, triggering a tax registration requirement there.
Why it matters
Economic nexus rules mean a business can trigger a tax obligation in a state purely through online sales volume, with no office or employee there at all - a surprise for many growing businesses.
Worth knowing
- Can be triggered by physical presence or by crossing a sales/transaction threshold (economic nexus).
- Thresholds and rules differ by state or country, so nexus must be evaluated separately for each.
- Marketplace facilitator laws have reduced, but not eliminated, a seller's own tracking responsibilities.
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Let's talk it through
Tell us where things stand with putting nexus into practice and we'll respond with next steps, no forms, no waiting in a queue.
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