What Does the Word “Nexus” Mean?
A nexus is simply a connection.
Pre-2017: Physical Presence Nexus
Before 2017, you had to have a physical presence, however slight, to establish a nexus. This meant:
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Your sales agent visited another state
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You had a building in another state
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Your company delivered into another state using one of your own trucks
Post-2017: Economic Nexus
After 2017, something called an economic nexus was introduced.
All that means is that you did enough business in a particular state to create a sales tax obligation for yourself.
Determining Nexus Thresholds
You have to:
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Check the rules on each particular state to know the threshold.
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Or, if you prefer a simpler approach:
Give us a phone call and we can help you out with that.
Frequently Asked Questions
What is the definition of nexus in the context of tax law?
A nexus is a connection between a business and a state that creates a tax obligation. This can be physical (e.g., having an office or delivering goods with company trucks) or economic (based on sales volume).
How did nexus rules work before 2017?
Prior to 2017, a business needed a physical presence in a state to establish nexus. This included things like in-state employees, offices, or using company vehicles for deliveries.
What changed with nexus laws after 2017?
Post-2017, states began enforcing economic nexus laws. These laws create tax obligations based on the amount of business conducted in a state, regardless of physical presence.
How can I determine if I have economic nexus in a state?
You must check each state’s specific sales and transaction thresholds. If your business exceeds these limits, you likely have an economic nexus there.
Where can I get help understanding my nexus obligations?
You can contact Nexus Tax Defense for assistance in evaluating your business activities and determining where you have nexus. They offer personalized help navigating state-specific rules.