Sales tax nexus

Sales tax nexus is the legal connection between a business and a state that requires the business to register for, collect, and remit that state’s sales tax. Without nexus in a state, you generally have no obligation to collect its sales tax; with nexus, you do.

Nexus comes in two main forms. Physical nexus is created by a physical presence — an office, employees, inventory (including inventory held in a marketplace’s warehouse), or sometimes traveling sales staff. Economic nexus, established by the U.S. Supreme Court’s 2018 South Dakota v. Wayfair decision, is created by sales volume alone — exceeding a state’s dollar or transaction threshold even with no physical presence there.

Since Wayfair, a business selling online can trigger sales-tax obligations in dozens of states without ever setting foot in them — each state setting its own threshold (commonly $100,000 in sales or 200 transactions, though specifics vary and change). Many growing businesses cross these thresholds without realizing it, and unremitted sales tax plus penalties can accumulate quietly into a serious liability.

Determining where you have nexus, registering, configuring QuickBooks to charge the right rates, and filing on each state’s schedule is operational work TechBrot does in your books. The legal determination of nexus and any tax filings or controversy are confirmed with your CPA, EA, or a sales-tax specialist — we keep the books and the collection right; the licensed professional advises and files where required.