- Economic nexus is a tax obligation for out-of-state sellers based on sales revenue or transaction volume, not just physical presence.
- The 2018 Supreme Court decision in South Dakota v. Wayfair, Inc. allowed states to require remote sellers to collect and remit sales tax if certain thresholds are met.
- Each state sets its own economic nexus thresholds, typically based on sales revenue (e.g., $100,000 or $250,000) or number of transactions (e.g., 200).
- The rules and definitions for what counts toward these thresholds vary by state, including the look-back period and types of sales included.
- Businesses selling across state lines must monitor and comply with varying state sales tax laws to manage financial risk.
Source: vatit.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.
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