Nexus is the legal threshold that determines whether a state can require you to collect and remit its sales tax. It used to be a fairly simple question tied to physical presence. Since the Supreme Court's Wayfair decision, most states also apply economic nexus — meaning you can trigger a tax obligation in a state you've never set foot in, purely based on sales volume or transaction count.
Why growing sellers get caught off guard
Economic nexus thresholds vary by state — often a specific dollar amount of sales or number of transactions in a 12-month period. A business selling across multiple channels — wholesale, direct retail, ecommerce, marketplaces — can cross these thresholds in states it never intended to have a tax presence in, often without anyone tracking it in real time.
What growing sellers should have in place
- A regular nexus review across all sales channels, not a one-time check done at initial setup
- Clarity on which states you're already registered in, and which thresholds you're approaching elsewhere
- An understanding of marketplace facilitator rules, which can shift collection responsibility away from you for certain channels — but not all of them
Nexus exposure tends to accumulate quietly. A business that reviews it only when a state notice arrives is reviewing it too late — by then, the exposure usually covers more than one filing period.