Sales Tax | Economic Nexus
No state writes to tell you.
An obligation to collect starts the moment your activity in a state passes what that state decided was enough. Nothing arrives to mark the occasion. Sales are measured against each state as they happen, so the first time you hear about it is from your own books rather than from a notice with interest attached.
What the system does
Capability, input, output.
| Capability | Input | Output |
|---|---|---|
| Per-state measurement | Invoices with a ship-to or service address | Rolling activity per state, on the basis that state uses |
| Approach warning | Activity against your configured trigger | States you are close to, surfaced before you cross rather than after |
| Crossing record | The invoice that took you over | The date and the specific sale, kept as the fact you will be asked for |
| Marketplace split | Marketplace settlements against direct sales | Direct and facilitated activity counted separately, since states treat them differently |
| Physical presence flags | Employees, inventory locations, offices you record | States where presence, not volume, is the trigger |
| Entity view | Multiple selling entities | Nexus assessed per entity, because the obligation follows the legal entity |
-
Per-state measurement
- Input
- Invoices with a ship-to or service address
- Output
- Rolling activity per state, on the basis that state uses
-
Approach warning
- Input
- Activity against your configured trigger
- Output
- States you are close to, surfaced before you cross rather than after
-
Crossing record
- Input
- The invoice that took you over
- Output
- The date and the specific sale, kept as the fact you will be asked for
-
Marketplace split
- Input
- Marketplace settlements against direct sales
- Output
- Direct and facilitated activity counted separately, since states treat them differently
-
Physical presence flags
- Input
- Employees, inventory locations, offices you record
- Output
- States where presence, not volume, is the trigger
-
Entity view
- Input
- Multiple selling entities
- Output
- Nexus assessed per entity, because the obligation follows the legal entity
Nexus FAQ
What buyers ask.
Does this tell me the threshold for each state?
We hold the trigger you or your advisor configure per state, and measure your activity against it. We deliberately do not ship a built-in table of thresholds as product copy, because states change them and several have dropped the transaction-count test entirely. A number we printed last year and you read this year is the exact failure this page exists to prevent.
We passed a threshold two years ago and never registered. What now?
That is a conversation with a state tax advisor, not a software question, and most states have a voluntary disclosure route that limits how far back it goes. What the system gives that conversation is the thing it needs: the date you crossed and the sales that did it, evidenced from your own invoices.
Do sales through Amazon or Shopify count toward nexus?
It depends on the state and on who collected. Marketplace-facilitated sales and your direct sales are counted separately here for that reason, so whichever way a given state treats them, you can see the two numbers rather than one blended figure that answers neither question.
What about physical presence?
Still the older and simpler trigger, and still the one that catches people. A remote employee, inventory sitting in a fulfilment warehouse or a trade show can create presence regardless of volume. Locations and inventory sites you record are flagged as presence states rather than measured against a sales figure.
We only sell services. Are we out of scope?
Not automatically. Some states tax specified services and some tax software delivered as a service, and the list is not the same in any two of them. Treating services as universally exempt is one of the more expensive assumptions in this area.
More in Sales Tax Compliance
Related features
See which states your sales have already crossed into.
Connect your books, free. Activity is measured per state against your real invoices, and the states you are close to come to the top.