Before South Dakota v. Wayfair, Inc. (2018), states could only require sales tax collection from sellers with a physical presence in the state. Wayfair changed that — states can now impose collection obligations on remote sellers who meet economic thresholds. Today, every state with a general sales tax has economic nexus rules, and the compliance burden on multi-state sellers has never been higher.

Physical Nexus: Still Applies

Physical nexus — the original trigger — still applies. It arises from: an office or warehouse in the state, employees working there regularly, inventory stored in the state (including Amazon FBA), or trade show attendance exceeding de minimis thresholds. Amazon FBA is a particularly common trap — sellers using Amazon's fulfillment network often have inventory in 20+ states, creating physical nexus in all of them.

Economic Nexus After Wayfair

Following South Dakota v. Wayfair, 138 S. Ct. 2080 (2018), most states adopted the standard threshold: $100,000 in sales OR 200 separate transactions into the state in the current or prior calendar year. Some states have eliminated the transaction count threshold; a few use different dollar amounts. California, Texas, and New York use $500,000 for certain seller categories.

Marketplace Facilitator Laws

Every state with a sales tax now requires platforms like Amazon, Etsy, and eBay to collect and remit sales tax on behalf of third-party sellers. This shifts the burden but does not eliminate the seller's registration obligation in many states, and does not cover direct sales made outside the platform.

What to Do After Establishing Nexus

  1. Register for a sales tax permit with the state's Department of Revenue
  2. Begin collecting and remitting sales tax on all taxable sales into that state
  3. File periodic sales tax returns (monthly, quarterly, or annually depending on volume)

Failure to register after nexus is established creates retroactive liability — most states have no statute of limitations on sales tax obligations until a return is filed.

Colorado's Home Rule Municipality Problem

Colorado has approximately 70 home rule municipalities that independently administer their own sales taxes. Selling to customers in Denver, Aurora, and Colorado Springs requires separate registrations with each city, separate returns, and separate payments — in addition to state filing.

How Compliance Singularity Handles Sales Tax Nexus

Compliance Singularity ingests your sales data and analyzes each state for nexus exposure — both physical (detected from office locations and employee roster) and economic (computed from actual sales by state). When a threshold is approaching, the system alerts you before you cross it. When nexus is established, it queues the required state registration and schedules periodic return filings automatically.