Sales Tax Nexus
Definition
The connection to a state that requires you to register, collect and file sales tax there. For online sellers it can come from sales volume (economic nexus) or from inventory stored in the state, including in FBA warehouses.
Want a deeper explanation?
Nexus is what makes a state's sales tax your problem. Since online sellers can cross thresholds in many states without noticing, it is one of the most common hidden liabilities we find in growing e-commerce businesses.
Each state sets its own rules and thresholds, so it needs checking regularly as you grow. Watch for: rising sales into a state where you are not registered, because back taxes and penalties build up quietly.
Example
Selling more than a state's threshold (often $100,000 a year) into that state can create economic nexus, even with no office there.