If you sell products or services online, you’re likely to be familiar with the term Economic Nexus. If not - don’t worry, “economic nexus” is essentially just a fancy way of saying that a business must have a presence in a state in order to collect sales tax there.
The term was first defined after the Quill v. North Dakota supreme court case but was overturned after the supreme court ruling in the South Dakota v. Wayfair court case, so now a business must have a significant economic presence in a state to collect sales tax.
That means they do not necessarily have to have a physical presence there, they just need to make a certain amount of money from customers in that state to have a significant economic presence there.
While this may sound straightforward, it isn’t always the case. The latter court ruling now means that every state can create its own thresholds for what economic nexus is. While one state may say that you only need to make $10,000 in sales in their state to have economic nexus, another may set theirs at $500,000, and another may not have one. So, how are you supposed to know? We’ve laid everything out in our blog here, so make sure you bookmark this page!