However, there are a number of other reasons why remote sellers may find they have nexus in a state. We'll look at the rules for each state later, but first let's go over the most common types of nexus.
If you have any of the following arrangements as a remote seller, you may have bc data singapore nexus in multiple states, even if you have not met the economic nexus threshold in that state. Please note that exact definitions and fine print differ in each state. Check individual state regulations to see if these rules apply to you.
Physical nexus
Physical nexus refers to a physical palace of business, typically defined as an office, retail store, showroom, etc. Remote sellers must still remember that they have “home state nexus” wherever their business is registered, and they must pay sales tax there (if the state collects sales tax). For a remote seller’s home state, the requirements are the same as for any brick-and-mortar business operating in the state.
Employee Nexus
Employee nexus generally applies to businesses that have employees in the state. Sometimes, this can also include vendors, representatives, contractors, or any type of agent.
If you have employees or representatives in another state, check the specific laws of the state in which they operate to find out whether or not they recognize employee nexus. If they do, you may be required to collect and remit sales tax there.
Inventory nexus
Much like Amazon stores inventory across the country, many eCommerce sellers choose to house their inventory in strategic states to allow for faster shipping. This can be done in a number of different ways, including:
maintain a dedicated warehouse;
Working with a third party to fulfill your orders (dropshipping); or
using a 3PL company to store and deliver your products.
Regardless of the arrangement, inventory in another state may constitute nexus, depending on the state.
FBA sellers are most likely to have this consideration: To determine where your inventory is stored as an FBA seller, get a Detailed Inventory Report from Amazon Seller Central.
Click Nexus / Affiliate Nexus
Click-through or affiliate linking is an interesting type of link and can be very complicated. Affiliate websites often promote or advertise products for another company, redirecting consumers to that site in exchange for a commission or other compensation.
Some states now consider a remote seller with an affiliate in the state to have clickstream nexus in their state, even if the seller has not achieved economic or other nexus. New York, California, and Illinois are among the states that have recognized affiliate nexus.
Production nexus
In some states, a product manufactured, created, or assembled in that state is sufficient to constitute nexus. In Hawaii, the presence of a product's developer may constitute nexus.
Nexus of commercial presence
Registering a business entity, sometimes including a mailing address in the state, may be enough to establish nexus, even if the business has no physical presence or sales in the state.
Link to request
Advertising or soliciting business in one state can create nexus across multiple states. This can include print advertising, sales calls, salespeople, or even systematic solicitations via electronic means (i.e., an email list).
Service Nexus
A business that provides services for customers may have nexus on that basis. This may include installation, repair or services through an outside contractor.
An entity that owns or leases property creates nexus for itself in many states. It can be real property (real estate) or personal property, such as vehicles, fixtures, or other equipment.
Delivery link
A company that delivers goods into another state may have nexus there, depending on the state’s specific rules. This rule is often specifically limited to “delivery into the state in vehicles owned by the taxpayer.”
Sales tax on origin versus destination
When calculating your sales tax, you'll have to deal with the important difference between "destination states" and "origin states." While in the past most states tended to be destination-based, the rise of e-commerce has seen a shift toward origin-based sales tax, allowing the state from which the product is shipped to retain a larger share of the tax revenue collected by businesses operating in that state.
