Answering Economic Nexus Questions

What is economic nexus?

Economic nexus represents a shift in how states determine a business's obligation to collect and remit sales tax. Traditionally, sales tax nexus was based on a physical presence in a state, such as a storefront or warehouse. However, with the rise of online commerce, the Supreme Court's Wayfair decision allowed states to adopt economic nexus standards. This means that businesses can be required to collect sales tax in states where they exceed certain sales thresholds, even if they have no physical presence there.

What is a remote seller?

Remote sellers, who operate without a physical presence in a state but sell taxable goods or services there, must adhere to state-specific economic nexus criteria.

Is a marketplace facilitator a remote seller?

Marketplace facilitators, while sometimes overlapping with remote sellers, are distinct as they operate platforms that enable transactions between buyers and multiple sellers.

What is click-through nexus?

Lastly, click-through nexus laws extend tax obligations to out-of-state sellers who benefit from in-state affiliates that drive sales through referrals. Each of these concepts reflects the evolving landscape of sales tax in the digital age, where states are finding ways to capture revenue from online transactions.