Economic Nexus

The Supreme Court decision in Wayfair vs. South Dakota brought to the forefront a concept known as Economic Nexus. What this concept is referring to is essentially, where are you for tax purposes. With the explosion of remote work as well as the continued growth of ecommerce, this concept is more challenging than it once was. For example, if your company is based in Colorado but you have an employee working remotely from their home in Michigan, where is that employee considered to be? Conversely, if your company is based in Florida, but you sell products online to buyers across the country, where are those sales considered to take place? The decision in Wayfair opened up the ability for states to claim a business has nexus in their state without a physical presence in that state. Every state has different rules and exceptions for when you must report to them, and the rules also differ by the type of tax - for example, employment tax rules may be different from sales tax rules. It's important to understand the concept of nexus and how it applies to your business so that you stay in compliance with laws and regulations.