Life can be full of unpleasant surprises. A fly in your morning coffee, a best-forgotten ex calling you out of the blue, or an unexpected sales tax bill from a state you didn’t even know you were doing business in. Sales tax nexus varies by state, meaning your ecommerce store could trigger sales tax without you realizing it.
We get it—you don’t want to have to think about where and when you need to pay sales tax, especially since there are more than 11,000 sales tax jurisdictions in the U.S. That’s why we make it easy to calculate your sales tax nexus by state and will even collect, remit and file your sales tax for you.
What Is Sales Tax Nexus by State?
It is the connection your ecommerce business has to a particular state. It’s used to determine when you have to collect and pay sales tax.
Sometimes, sales tax nexus is easy to figure out. If your company is physically located in a state that collects sales tax, like Pennsylvania or New York, you must collect tax from customers in your home state.
Without nexus or a connection to a state, you have no obligation to collect or pay sales tax there. Nearly every state in the U.S. has at least one type of nexus.
How Ecommerce Complicates Sales Tax Nexus by State
Before 2018, companies triggered nexus when they had a physical presence in the state, such as an office or warehouse. That all changed after Wayfair vs. South Dakota.
In Wayfair vs. South Dakota, the U.S. Supreme Court ruled that a business doesn’t need to be physically located in a state to have a connection there. Companies simply need an economic connection to a state. Usually, that means a company needs to sell over a certain dollar amount to customers in a particular state or have more than a certain number of sales.
What does this mean for your company? You may never have stepped foot in Oklahoma, but if you get popular there and have more than $100,000 in sales, you’ll need to collect and pay sales tax to the state.
How Do You Calculate Nexus by State?
You could crunch the numbers and determine your sales tax nexus in each state. But we know you have better things to do. That’s why we have a handy sales tax nexus by state chart. Just tap on the state you’re curious about and see the sales or transaction threshold that will trigger nexus.
If you want to take it a step further, TaxCloud’s sales tax software calculates your tax obligations in the 11,000-plus sales tax jurisdictions. We’ll collect tax for you if you need to collect tax in a certain state or municipality. Come filing time, we will even remit and file your tax returns.
Nexus shouldn’t keep you up at night. Contact us today to learn more about what TaxCloud can do for you and sleep well tonight.