*Nexus Tax Laws
a quick overview
Nexus tax laws apply to businesses that have a connection or presence in a state that requires them to collect and remit sales tax in that state. The type and degree of connection or presence that triggers nexus can vary by state and by type of tax. Some of the common factors that create nexus are:
♦ Having a physical location in the state, such as an office, warehouse, or store
♦ Having employees or representatives in the state, such as salespeople, agents, or contractors
♦ Storing inventory or products in the state, such as in a fulfillment center or third-party warehouse
♦ Selling or delivering goods or services in the state, such as through online platforms, marketplaces, or drop shipping
♦ Reaching a certain amount of sales or transactions in the state, such as through economic nexus or marketplace facilitator laws
If you have nexus in a state, you need to register with the state tax authority, collect and remit sales tax from your customers in that state, and file sales tax returns according to the state’s rules and deadlines. Failing to comply with nexus tax laws can result in penalties, interest, and audits.