WTF? / Part 2 / 2.6
What is sales tax nexus?

Sales tax nexus

THE 30-SECOND ANSWER

Nexus is the connection between your business and a state that creates an obligation to register for and collect that state's sales tax.

In plain English

Physical presence, a location, inventory, employees, sometimes delivery, is the traditional trigger. Many states also apply economic thresholds based on sales into the state.

Thresholds and definitions vary by state and change. Treat nexus as a question to confirm with each state's revenue agency or your accountant, not a rule of thumb.

Example

You open a second warehouse across a state line and now have a registration question in that state.

Why it matters

Uncollected sales tax does not disappear. It becomes a liability the business owes later, with interest.

COMMON MISTAKEAssuming online sales are automatically tax-free.
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