Nexus is a legal term and what it means is essentially a code for the level of minimum contacts that you have in a state. Minimum contacts can include:
Key Takeaways
- Nexus is a legal term and what it means is essentially a code for the level of minimum contacts that you have in a state.
- Third party contacts can be independent contractors or vendors.
- These contacts would tend to trigger Nexus in a particular state so if you have that level, you meet the Nexus threshold.
- physical contacts
- economic contacts
- contacts through third parties
Third party contacts can be independent contractors or vendors.
These contacts would tend to trigger Nexus in a particular state so if you have that level, you meet the Nexus threshold.
Take California for example. California has one of the broader Nexus statutes among all of the states as it has a very large economy and a very robust state revenue department. The laws in California are designed so that if a company has any number of contacts with California, then it subjects itself to tax jurisdiction within California.
A certain level of contacts means you’ll probably be obligated to either collect sales tax in the state of California or pay state income tax to California depending on your situation.
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