Economic Nexus
Economic nexus is sales tax nexus created purely by sales volume into a state, no physical presence required. It became law nationwide after the Supreme Court's 2018 Wayfair decision. The most common threshold is $100,000 in annual sales into the state; some states use $250,000 or $500,000, and many have dropped their old 200-transaction tests. Cross the threshold and you're required to register and collect on your direct-channel sales.
Economic nexus is why a Texas Shopify brand with no warehouse outside Dallas can owe registrations in a dozen states. Sell $130,000 of product into California in a rolling year and California expects you registered and collecting. Sell $40,000 into a $100,000-threshold state and you're fine there, for now. The thresholds reset and roll, so this is a monitoring problem, not a one-time checkup.
Two details trip sellers up. First, some states count marketplace sales toward the threshold even though the marketplace facilitator remits the tax on those orders, so your Amazon volume can push your Shopify channel over the line. Second, crossing a sales tax threshold sometimes triggers other obligations, like income or franchise tax filings, on a separate set of rules. We track thresholds from your actual channel data as part of ecommerce tax services, since the books already know where every order shipped.
Where this shows up in our work
This isn’t textbook material for us; it’s the day-to-day of keeping seller books right. See how we handle it in practice:
Ecommerce Tax Services→Related terms