Economic nexus
Sales tax nexus triggered by sales volume thresholds without physical presence.
Definition
Economic nexus is sales tax nexus created by exceeding a state's sales threshold ($100K or 200 transactions in many states, higher in some). Established by the South Dakota v. Wayfair (2018) US Supreme Court decision.
Context
Post-Wayfair, most US states have economic nexus rules. Affects Delaware LLCs selling to consumers nationwide.
Example
A Delaware LLC Shopify store ships to all 50 states. The LLC monitors per-state sales and registers for sales tax in states where economic-nexus thresholds are exceeded.
Common pitfalls
- Thresholds and effective dates vary by state.
- Use a service like TaxJar or Avalara for multi-state nexus tracking.