• About Us
  • Write For Us
  • Contact Us
  • Privacy Policy
Reading: Physical vs. Economic Nexus – The Differences
Share
IT Graviti
  • Latest Technology
  • How To
  • Gadgets
  • What Is
  • Gaming
  • Cybersecurity
  • Write For Us
Reading: Physical vs. Economic Nexus – The Differences
Share
IT GravitiIT Graviti
Aa
  • Latest Technology
  • How To
  • Gadgets
  • What Is
  • Gaming
  • Cybersecurity
  • Write For Us
Search
  • Latest Technology
  • How To
  • Gadgets
  • What Is
  • Gaming
  • Cybersecurity
  • Write For Us
Follow US
© All Rights Reserved by IT Graviti.
IT Graviti > Blog > IT Graviti > Physical vs. Economic Nexus – The Differences
IT Graviti

Physical vs. Economic Nexus – The Differences

itgraviti
Last updated: 2022/12/07 at 12:37 PM
itgraviti
Share
4 Min Read
Physical vs. Economic Nexus – The Differences
SHARE

Physical vs Economic Nexus – The Differences With many states in the United States and the potential customer reach nationwide, businesses in the US often need to deal with the customers from different states. They need to sell their products and send them to the customers in other states, even though they might not have any established office or traditional store there. With today’s domination of e-commerce platforms, many businesses in the US will have more and more opportunities to reach and expand their customers to include those living in different states.

Contents
The Old Rule – Physical Nexus Sales TaxThe New Rule – Economic Nexus Sales Tax

However, it doesn’t mean that they can just do business as usual with people from other states. By doing business with people from other states, they are establishing a nexus in their business. Nexus means the connection between their business with certain states where their business is operating, which makes them eligible to collect sales tax in that area. So, as the result of reaching more customers in other states, businesses in the United States also need to collect sales tax for their products and services sold in the interstates. For more help to understand about sales tax nexus, go here.

Table of Contents

  • The Old Rule – Physical Nexus Sales Tax
  • The New Rule – Economic Nexus Sales Tax

The Old Rule – Physical Nexus Sales Tax

In the past, before the e-commerce giants like Amazon, eBay, Wal-Mart, and others dominated the business landscape, businesses in the United States were eligible to collect sales tax only if they have a business presence in other states. With no business presence in other states, the state cannot enforce the sales tax nexus rules for the business. They cannot require the business to collect sales tax from their products since there is no official presence of their business in the state.

This physical nexus sales tax rule was fine before e-commerce and the popularization of online business. With the change of the technological landscape involving buying and selling, a newer nexus sales tax rule needs to be established.

The New Rule – Economic Nexus Sales Tax

In 2018, the United States government released a new sales tax rule for businesses operating in other states. It doesn’t matter if they have any business presence in other states or not. Any business that sells products and services interstate needs to register for the eligibility to collect sales tax for their products, and they need to pay for the sales tax to the local state authorities once they’ve reached a certain sales threshold.

This is the new rule for the interstate buying and selling activities in the United States, and each state has their own threshold that businesses need to reach per year. Each business needs to pay the sales tax for their products and services sold in the state when they reach the sales threshold during the year. If they don’t reach any sales threshold, then they don’t need to pay any taxes to the respective state.

Economic nexus makes it possible for states to have more revenue streams from businesses operating in their state from other states, and they can also help local businesses get an advantage when competing with the out-of-state sellers. Local businesses can offer more competitive pricing, and they no longer need to worry that interstate sellers might dominate the market with their low pricing models.

Also, You can find more helpful resources at marketingmarine.

You Might Also Like

Convert PDF to Excel and Vice Versa: How to Proceed?

Choosing The Best Call Center Software: What To Look For

Staying Safe When Gambling Online

A Guide To Setting Up An E-Commerce Shipping Strategy

OKR Certifications: Why They Are Important and Who Needs Them

itgraviti August 4, 2021
Share this Article
Facebook Twitter Whatsapp Whatsapp LinkedIn Email Copy Link Print
Leave a comment Leave a comment

Leave a Reply Cancel reply

Your email address will not be published. Required fields are marked *

Recent Post

123series
Uncategorized

123series Watch TV Series Online Free

March 16, 2023
Viking Barbie
Entertainment

Viking Barbie,Wiki, Height, Age, Boyfriend, Family, Biography

March 15, 2023
Benefits of Art NFTs
MarketingStrategyTips & Tricks

The Art Revolution: Exploring the Benefits of Art NFTs

February 27, 2023
Title IX
What Is

Title IX: Frequently Asked Questions

February 9, 2023
Ethical Investors
MarketingStrategyTech

Socially Responsible Stock Funds: Everything Ethical Investors Need To Know

February 1, 2023
How to Fix Outlook Error code pii_email_9f55451c2842463277c4
Tips & Tricks

How To Fix Outlook Error code [pii_email_9f55451c2842463277c4]?

January 18, 2023
Soft Skills Help a Business
Latest Technology

How Can Behavioral Training Paired with Soft Skills Help a Business?

January 11, 2023
Crypto Market maker
Marketing

What is a Crypto Market Maker?

January 9, 2023
Coinbase
MarketingTech

How to Get Started With the Coinbase Trading Bot?

January 9, 2023
Cloud Migration
Marketing

Here are Ways Your Business Will Benefit from Cloud Migration

December 22, 2022

You Might Also Like

Convert PDF to Excel
IT Graviti

Convert PDF to Excel and Vice Versa: How to Proceed?

October 26, 2022
Call center software
IT Graviti

Choosing The Best Call Center Software: What To Look For

August 25, 2022
Gambling Online
IT Graviti

Staying Safe When Gambling Online

August 24, 2022
E-Commerce Shipping
IT Graviti

A Guide To Setting Up An E-Commerce Shipping Strategy

July 22, 2022

Follow US on Social Media

Facebook Twitter Linkedin Instagram

© All Rights Reserved by.

IT Graviti
IT Graviti

IT Graviti is your go-to tech source for proficient IT knowledge and motivation. Our aim at IT Graviti is to provide our readers with information about all the latest technologies in the 21st century.

More from Foxiz

  • About Us
  • Write For Us
  • Contact Us
  • Privacy Policy

Removed from reading list

Undo
Welcome Back!

Sign in to your account

Lost your password?