What is Nexus?
February 21, 2020
Nexus varies state by state but, generally speaking, the contacts required to generate taxes can be fairly minimal. Furthermore, the term "physical presence" is often misunderstood and can lead to unwanted surprises, including penalties. Other key focus areas include remote employees, and new sourcing rules among others.
For sales tax purposes, the physical presence requirement came about from a early 1990s Supreme Court case known as the Quill decision. And in that decision, they found that in order to be subjected to a state sales tax collection requirements, you had to have some sort of physical presence in that state. Now, that term physical presence has been greatly misinterpreted over the years as states became very aggressive in applying that and interpreting what that meant.