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 states care whether sales are taxable or exempt when analyzing economic nexus thresholds? Do they look at total sales or just taxable sales?
A: It depends on the state. Some states say total sales including exempt sales. Other states say only taxable sales. Some states exclude sales for resale but include other exempt sales. Some states exclude marketplace sales while others include them. We have a free chart on our website that details what is included or excluded as well as the economic thresholds, their effective dates, and other useful information. States are continuously updating their information and as they do we update the chart. The chart is called Economic Nexus Thresholds and can be found here: https://www.salestaxandmore.com/state-tax-charts-matrices
Q: Could you address registering in states where you may have sufficient sales for economic nexus but have exempt sales?
A: If all your sales are exempt, then make sure you are collecting a valid exemption certificate on all your sales. When it comes to registrations some state do not require a company with 100% exempt sales to register. However other states do require you to register and file zero-dollar returns. The risk is when you are not collecting a completely filled out exemption certificate on the correct form.