What is economic nexus for sales tax?
Economic nexus is a sales-tax connection a state creates from the volume of business you do into it — revenue, transaction count, or either — with no physical presence required. Nothing needs to be owned, rented or stored there. Once the state's measure is met you fall within its registration and collection rules exactly as a business with a shop on the main street does. Two features cause most of the trouble. The measure is tested against each state's own definition of what counts, and being registered in one state has no effect whatever on the next. It is a per-jurisdiction question with a per-jurisdiction answer.
Do I need to register in a state where I have no premises?
Very possibly. Physical presence was once the gate and it is no longer the only route in. A state can base the connection on what you sold into it, so a seller with no premises, staff or stock there can still be required to register, charge tax on its supplies to that state and file returns. The practical consequence is that the obligation is discovered from your own sales data rather than from anything in your property records. If you can produce sales by destination state and by period, you can answer the question; if you cannot, building that reporting is the first piece of work.
How do I know if I have crossed a state's sales-tax threshold?
From your own sales, split by destination and by period, measured on that state's definition. It sounds mechanical and it is where most of the errors sit, because states differ on what goes into the measure — whether exempt or wholesale sales count, whether the test looks at the current or the preceding period, and whether transaction volume counts alongside revenue. Running a single number against every state produces a confident answer that is wrong in some of them. Build the sales data once at destination level, then apply each state's own test to it. That also fixes the date you crossed, which decides how much history is in scope.
Does a marketplace collect the sales tax for me?
Sometimes, and it matters which sales those are. Where a marketplace is made responsible for the tax on sales it facilitates, that tax is not yours to collect on those transactions — but it does not follow that you have nothing to do. Your own direct sales sit outside the marketplace and are measured separately, and states differ on whether facilitated sales still count towards your own measure. So the first step is to split revenue into facilitated and direct, by state, rather than rely on a platform statement as a complete answer. The registration question is then asked on the right figures.
What happens if I passed the threshold two years ago?
Then the question is how many periods are open, not whether to start charging now. Registering from today leaves the crossed periods behind you, and the liability generally runs from the date the connection began rather than the date you noticed. The work is to fix the crossing date from your own sales data, establish what was actually taxable in that state over the intervening periods, and choose how to bring it forward — states commonly have a route for a seller who comes forward before being contacted, and its terms are usually better than what is available after a notice arrives. Measure first, then choose the route.
Do economic nexus rules apply to services and digital products?
Often, yes, and the answer turns on what the state taxes rather than on the connection test itself. The connection test measures your volume into the state; a separate question decides whether what you sold is taxable there. Services and digital products are treated inconsistently — the same download or subscription can be taxable in one state, exempt in another and characterised as something else again in a third. Two determinations are therefore needed in sequence: does my volume create the connection, and is my particular supply inside that state's tax base. A seller who answers only the first ends up registered and still filing incorrectly.
I work remotely from another country for a company back home — who taxes me?
Usually the country you are physically in, because employment income is generally sourced where the work is done, with your residence country taxing it as well if you are resident there and giving credit. Three things follow: your employer may acquire withholding and social security obligations where you sit, a treaty tie-breaker may be needed if both countries call you resident, and a short trip that becomes a long stay can cross a residence threshold nobody was watching. See remote workers and digital nomads.
What is a totalization agreement and how do I use one?
A social security agreement that stops you contributing to two systems for the same work, and lets periods in both count towards benefit eligibility in either. Which system you stay in depends on the agreement's rules for your situation — a seconded employee usually remains in the home system for a set period, a locally hired one usually joins the host system. You evidence it with a certificate of coverage obtained before or shortly after the assignment starts. See certificates of coverage.
