What is Nexus?
Definition Nexus is the connection between a business and a state that is strong enough to create a tax obligation there, such as an income tax filing requirement or a duty to collect sales tax. It can arise from a physical presence like employees or property, or from economic activity such as exceeding a sales threshold in the state. The Supreme Court's Wayfair decision expanded economic nexus for sales tax.
As businesses sell across state lines, tracking where they have nexus prevents surprise multistate filing and sales-tax collection obligations.