Getting tax compliance right is important. The first step is understanding where your business
has nexus, or where you need to collect and remit sales and use tax. Nexus is ever-changing and
it can be confusing for even savvy professionals.
Once your business has a nexus with a state or local jurisdiction such as a county or city, you must
adhere to that taxing authority’s rules including collecting and remitting sales and use tax on
products and services you sell. Use tax responsibilities come into play when taxable products or
services are purchased without sales tax. The buyer must pay use tax to the jurisdiction where
the item is used or stored. Read our 5 steps to managing sales tax guide to better understand
your obligations and how to stay compliant.
Unfortunately, you can’t just figure out where you have nexus today and forget about it —
you have to closely monitor changes to nexus. Many activities can trigger new tax collection
obligations for your business, especially now that every state has passed laws targeting
remote sales and use tax revenue and online marketplace sales.
It’s been a while since the 2018 U.S. Supreme Court decision, South Dakota v. Wayfair, Inc.,
led to economic nexus laws in every state with sales tax. Many companies still have a lot
to understand about nexus and how it’s established from state to state. According to a
2023 survey by Censuswide, about 55% of respondents can explain all their online sales tax
obligations to someone outside their organization. More than 71% of respondents agree or
strongly agree that online sales tax requirements including economic nexus and marketplace
facilitator laws are complex and confusing.
