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Compliance 10 July, 2024

Economic nexus simplified: State sales tax guide

By:CT Corporation Staff

Remote sellers sell their products or services for delivery into states where they have no physical presence. They must register with the state tax department, collect sales tax, and remit what they collected to the state if they have an “economic nexus” with the state. In some states, these requirements may also apply to marketplace facilitators.

Some state sales tax laws provide that a remote seller has an economic nexus if its annual sales of products or services in the state exceeds a threshold dollar amount. Other states provide an economic nexus if the remote seller’s annual sales of goods or services in the state exceeds a threshold dollar amount or it has a threshold number of sales transactions in the state. Two states, Connecticut and New York, provide that an economic nexus exists if both sales dollar amount and sales transactions thresholds are reached.

The chart below sets forth the sales and transaction thresholds of each state that imposes a sales tax. It should be noted that this chart provides general guidance only and is not legal advice. State sales tax laws can be complex and anyone with a question about their specific obligations may wish to consult tax, accounting, or legal experts.

This chart contains information compiled as of June 22, 2024.

Economic nexus thresholds under state sales tax laws

Alabama Sales dollar amount: $250,000 Number of sales transactions: ------
Alaska

Sales dollar amount: $100,000

Note: Sellers should utilize the Alaska Remote Seller Sales Tax Commission portal to file taxes for jurisdictions that have adopted the Alaska Remote Seller Sales Tax Code. For sales in jurisdictions that have not yet adopted the code, they must continue filing directly with the jurisdiction using their own sales tax forms.

 Number of sales transactions: 200
Arizona Sales dollar amount: $100,000 Number of sales transactions: ------
Arkansas Sales dollar amount: $100,000 Number of sales transactions: 200
California Sales dollar amount: $500,000 Number of sales transactions: ------
Colorado Sales dollar amount: $100,000

Note: If a remote seller has sales less than $100,000 in value, they are exempt from state sales tax licensing and collection requirements in Colorado. However, they must notify customers of their obligation to remit use tax. Non-collecting retailers should review Department rule 39-21-112(3.5) about notice and reporting requirements.

 Number of sales transactions: ------
Connecticut Sales dollar amount: $100,000*

* When the remote seller or marketplace facilitator meets or exceeds both a sales and transactions threshold, they are obligated to collect and remit sales tax.

 Number of sales transactions: 200
Delaware Sales dollar amount: ------

Note: Delaware does not have a sales tax.		 Number of sales transactions: ------
District of Columbia Sales dollar amount: $100,000 Number of sales transactions: 200
Florida Sales dollar amount: $100,000 Number of sales transactions: ------
Georgia Sales dollar amount: $100,000 Number of sales transactions: 200
Hawaii Sales dollar amount: $100,000 Number of sales transactions: 200
Idaho Sales dollar amount: $100,000 Number of sales transactions: ------
Illinois Sales dollar amount: $100,000 Number of sales transactions: 200
Indiana Sales dollar amount: $100,000 Number of sales transactions: ------

Note: Starting from January 1, 2024, Indiana will only have the $100,000 threshold for sales tax. If a merchant reaches the 200 transaction threshold in 2023 but does not meet the $100,000 threshold, they will be able to close their sales tax account in 2024 if their sales in 2024 do not exceed $100,000. However, they will still need to file all necessary sales tax returns for 2024.
Iowa Sales dollar amount: $100,000 Number of sales transactions: ------
Kansas Sales dollar amount: $100,000 Number of sales transactions: ------
Kentucky Sales dollar amount: $100,000 Number of sales transactions: 200
Louisiana Sales dollar amount: $100,000 Number of sales transactions: ------
Maine Sales dollar amount: $100,000 Number of sales transactions: ------
Maryland Sales dollar amount: $100,000 Number of sales transactions: 200
Massachusetts Sales dollar amount: $100,000 Number of sales transactions: ------
Michigan Sales dollar amount: $100,000 Number of sales transactions: 200
Minnesota Sales dollar amount: $100,000 Number of sales transactions: 200
Mississippi Sales dollar amount: $250,000 Number of sales transactions: ------
Missouri Sales dollar amount: $100,000 Number of sales transactions: ------
Montana Sales dollar amount: ------

Note: Montana does not have a sales 		Number of sales transactions: ------
Nebraska Sales dollar amount: $100,000 Number of sales transactions: 200
Nevada Sales dollar amount: $100,000 Number of sales transactions: 200
New Hampshire Sales dollar amount: ------

Note: New Hampshire does not have a sales tax.		 Number of sales transactions: ------
New Jersey Sales dollar amount: $100,000 Number of sales transactions: 200
New Mexico Sales dollar amount: $100,000 Number of sales transactions: ------
New York Sales dollar amount: $500,000*

*To establish economic nexus in New York State, businesses with no physical presence must have sales of tangible personal property totaling $500,000 or more, along with more than 100 sales transactions. 		Number of sales transactions: 100
North Carolina Sales dollar amount: $100,000 Number of sales transactions: 200
North Dakota Sales dollar amount: $100,000 Number of sales transactions: ------
Ohio Sales dollar amount: $100,000 Number of sales transactions: 200
Oklahoma Sales dollar amount: $100,000 Number of sales transactions: ------
Oregon Sales dollar amount: ------

Note: Oregon does not have a sales tax.		 Number of sales transactions: ------
Pennsylvania Sales dollar amount: $100,000 Number of sales transactions: ------
Rhode Island Sales dollar amount: $100,000

Note: There are specific obligations under Rhode Island's law for out-of-state entities such as non-collecting retailers, referrers, and retail sales facilitators. 		Number of sales transactions: 200
South Carolina Sales dollar amount: $100,000 Number of sales transactions: ------
South Dakota Sales dollar amount: $100,000 Number of sales transactions: ------
Tennessee Sales dollar amount: $100,000 Number of sales transactions: ------
Texas Sales dollar amount: $500,000 Number of sales transactions: ------
Utah Sales dollar amount: $100,000 Number of sales transactions: 200
Vermont Sales dollar amount: $100,000 Number of sales transactions: 200
Virginia Sales dollar amount: $100,000 Number of sales transactions: 200
Washington Sales dollar amount: $100,000 Number of sales transactions: ------
West Virginia Sales dollar amount: $100,000 Number of sales transactions: 200
Wisconsin Sales dollar amount: $100,000 Number of sales transactions: ------
Wyoming Sales dollar amount: $100,000 Number of sales transactions: ------

Note: Starting from July 1, 2024, a new law changes Wyoming's economic nexus rules for remote sellers without a physical presence by eliminating the previous "200 or more separate transactions" threshold.

Frequently asked questions for economic nexus

What is economic nexus?

Economic nexus for sales tax (also known as "sales tax nexus") pertains to a business’ sales tax responsibilities in a state other than its home state. Nexus is typically triggered when a business's sales activities in a state reach a specific dollar amount and/or number of transactions. If a business meets the economic threshold set by each state, it must pay and collect sales tax. Keep in mind that the economic threshold varies by state.

Following the Wayfair ruling by the Supreme Court, states have begun to enforce economic nexus rules more broadly on sellers, such as internet retailers, by creating new registration and collection tools for all registered sellers.

What is a remote seller?

A remote seller is generally defined as a seller who does not have a physical presence in a state, sells taxable products or services for delivery into that state, and meets the state's criteria or economic threshold for a remote seller.

Depending on the state, a remote seller may need to register with a state’s department of revenue, collect and remit sales tax, and obtain a business license.

Is a marketplace facilitator considered to be a remote seller?

A marketplace facilitator is a company or legal entity that runs a website or service that allows customers to purchase items or services from various sellers.

Marketplace facilitator laws differ by state in how they are applied and defined. States may have distinct regulations for marketplace facilitators and remote sellers.

What is click-through nexus?

Click-through nexus laws say that an out-of-state seller without a physical presence in a state can be considered to have sales/use tax nexus if they have a local affiliate and meet certain other requirements. This happens when a person or business in the state refers or directs customers to the out-of-state online seller's business for a commission or other payment. In simpler terms, if a local business guides a customer through links or a website to buy from an out-of-state online business, it creates a click-through nexus.

CT Corporation Staff

The CT Corporation staff is comprised of experts offering global, regional, and local expertise on registered agent, incorporation, and legal entity compliance.

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