Sales Tax Nexus: When You Owe Tax in Another State
Before 2018, you only owed sales tax in states where you had a physical presence. After the Supreme Court's Wayfair decision, states can also require you to collect based on sales volume alone. For service businesses doing jobs in multiple states, this matters.
Physical nexus triggers. Office, warehouse, or storefront in the state
Economic nexus thresholds. Most states adopted a $100,000 in sales OR 200 transactions threshold. Some are higher (California, Texas: $500k). California and a few others dropped the transaction count and use revenue only.
Practical example. A Texas HVAC company does residential jobs only in Texas — single-state nexus, simple. The same company starts doing commercial installs in Oklahoma, hires a salesperson there, and crosses $150k in OK revenue. They now have nexus in OK and must register, collect, and remit Oklahoma sales tax.
Frequently asked questions
Does selling on Stripe or PayPal create nexus?
No. Marketplace facilitator laws make platforms like Amazon and eBay responsible, but direct payment processors do not create nexus by themselves.
How do I monitor nexus across states?
Track sales by ship-to state monthly. Tools like TaxJar and Avalara automate this. For a small business, a spreadsheet is fine until you near a threshold.
