- Nexus is the connection or presence a business has in a state, giving the state authority to require the business to collect and remit sales tax on taxable sales.
- Physical nexus is established when a business has a physical presence in a state,
- while economic nexus arises when a business exceeds certain thresholds of sales or economic activity within a state.
- Each state has its own rules on what constitutes economic nexus, including sales thresholds, reference periods, and exclusions for transactions made through a registered marketplace facilitator or to a reseller. Some states also allow exclusions for certain types of sales.
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