Sales Tax Nexus (sales nexus)
Sales tax nexus, often shortened to sales nexus, is a connection with a state strong enough that the state can make you register, collect and remit its sales tax. It comes in two flavors. Physical nexus is created by inventory, employees, offices or contractors in the state. Economic nexus is created by crossing a sales threshold. For FBA sellers the big one is inventory: Amazon moving your stock into a state's warehouse creates physical nexus there whether you asked or not.
Nexus is where ecommerce sellers accumulate invisible liability. An FBA seller's inventory routinely spreads across 20-plus states within months of enrolling, and each of those states has a claim. Marketplace facilitator laws blunt the damage, since Amazon remits tax on its own orders. But they don't erase registration obligations everywhere, and they don't cover your Shopify sales in those states. A few states also levy gross receipts taxes, like Washington's B&O, that the marketplace never pays for you.
The kinds of sales nexus
Physical nexus is the oldest: property, people or inventory in the state. Employees, contractors who solicit sales, a trade show booth for more than a few days in some states, and stock in a warehouse all count. Economic nexus, since the 2018 Wayfair ruling, comes from sales volume alone; $100,000 into the state is the common line. Affiliate and click-through nexus laws, which tied you to a state through in-state referral partners, mostly became irrelevant once economic nexus arrived. Trailing nexus is the one sellers forget. Several states keep you on the hook for a period after the connection ends, so pulling inventory out of a state doesn't end the obligation that month.
What nexus obligates you to do
Register for a permit. Collect the correct rate on taxable direct sales delivered into the state. File returns on the assigned schedule (monthly, quarterly or annually, by volume) and remit. Registration also creates the duty to keep filing in zero-due months.
Nexus doesn't mean you owe tax on marketplace orders where a facilitator collects. It also doesn't by itself mean you owe the state income tax, which runs on separate rules.
How to find out where you have it
Pull three reports. Sales by ship-to state from every channel for the last two calendar years. Amazon's inventory event detail, showing which fulfillment centers held your stock. And a list of anywhere you have people or property. Compare the first against each state's economic threshold and the other two against physical-presence rules. That's a nexus study.
The output is a short list of states that need registration now, a watch list, and a longer list where exposure is trivial and registering would cost more in filing fees than the tax.
The right response is triage, not panic: figure out where real dollars are at stake, register there, and skip the states where exposure is trivial. We run that analysis inside our ecommerce tax services, and our state guides for Washington and Florida show how different the rules can be.
Common questions
Can nexus go away? Yes, but not automatically. Close the registration once you're under the threshold and past any trailing period, or the state keeps expecting returns.
Does a 3PL create nexus? Inventory at a 3PL is physical presence, same as FBA stock. Choosing a 3PL in a state where you already sell direct at volume keeps the map simpler.
What if I've had nexus for years and never registered? Voluntary disclosure. Most states cap the lookback at three or four years and waive penalties for sellers who come forward first. Registering quietly and hoping isn't a strategy.
Where this shows up in our work
This isn’t textbook material for us; it’s the day-to-day of keeping seller books right. See how we handle it in practice:
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