Sales tax nexus: a plain-English guide for online sellers
Selling into a new state can create a tax obligation you didn't plan for. Here is how to check your exposure.
Amara Osei
·
7 min read
Since 2018, most states can require online sellers to collect sales tax even without a physical presence there. The rules vary, and the thresholds are lower than many owners expect.
What creates nexus
Usually it is sales above a dollar or transaction threshold in a state, measured over the current or previous year. Inventory in a marketplace warehouse can count too.
How to check your exposure
Export sales by ship-to state for the last two years and compare them with each state’s threshold. If you are over, register before the state contacts you.
Fixing the past
Many states offer voluntary disclosure programs that reduce penalties. It is almost always cheaper to come forward first.
Written by
Amara Osei
Partner, Tax
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