- Sales tax is a transactional tax imposed by state and local governments on the sale of goods and certain services.
- It is a consumption tax paid by the end consumer, but businesses are responsible for calculating, collecting, and remitting it.
- Sales tax nexus is the connection a business has with a state that requires it to collect and remit sales tax.
- Physical nexus is established with a tangible presence in a state, such as an office or warehouse.
- Economic nexus is triggered by exceeding sales or transaction thresholds in a state, even without a physical presence.
- States have different nexus rules, so businesses must monitor where they have nexus and ensure compliance.
- Some items are exempt from sales tax or taxed at a reduced rate, depending on state laws.
- Common exemptions include personal and professional services, essential goods like groceries and medications, and sales to exempt organizations.
Source: sovos.com
Note that this post was (partially) written with the help of AI. It is always useful to review the original source material, and where needed to obtain (local) advice from a specialist.
