Michael J Fleming & Associates

General Sales Tax

General Sales Tax Questions

Q: When do I need to register to collect sales tax?

A: A seller is required to collect sales when they have a link or connection to a state, called nexus, and what they sell is taxable. This link or connection can be caused by many activities and may either be physical or economic. Some common physical activities that can create nexus are: are having inventory in a warehouse including an Amazon warehouse, utilizing independant or subcontractors in a state, having employees in a state, having employees or third-parties travel into a state on your behalf, having an affiliate program in the state, and advertising in local media. These are just a few activities that can create a physical nexus. An economic nexus can be created when you cross a certain amount of sales. This level is called a threshold. The most common economic nexus thresholds are $100,000 or 200 transactions, although there are many deviations. Some state have notice and reporting requirement thresholds which are much lower. For example OK, PA & WA all have $10,000 thresholds. You may find charts with thresholds and effective dates for both economic nexus ane notice and reporting requirements in our resource section under charts and matrices.


Q: What is nexus?

A: Nexus is the industry term used to mean link or connection. It is the link or connection that must be present before a state can require you to collect its taxes like a sales tax or pay its taxes like an income tax.


Q: Are there states with no sales tax?

A: Yes, there are five states that do not have a state level sales tax. They are New Hampshire, Oregon, Montana, Alaska and Delaware. The Acronym used to remember these five states is NOMAD.


Q: Do I need a registered agent when registering for sales tax?

A: In general, a registered agent is not required if your are just registering for sales tax, even though many states make it look like it’s required. There is a workaround or process in most states where you can register without a registered agent as long as you do not have a brick and mortar location in the state. If you do need this service we do provide registered agent representation and other services.