Tax
Nexus
The connection between a business and a state that creates a tax filing or registration obligation.
Nexus comes in two main flavors: physical (office, employee, inventory in a state) and economic (sales or transaction thresholds, post-Wayfair). Crossing a nexus threshold creates obligations: register, collect tax, file returns.
Different tax types have different nexus rules — sales tax nexus is not the same as income tax nexus or payroll nexus.
Common pitfalls
- Treating a remote employee in another state as 'no big deal' — they trigger payroll nexus, sometimes income tax nexus
- Ignoring economic nexus thresholds for sales tax — Wayfair changed everything
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