What is a Sales Tax Nexus Study? Complete Guide for 2026

Understanding Sales Tax Nexus Studies

A sales tax nexus study is a comprehensive analysis that determines where your business has tax collection obligations. With the 2018 Wayfair decision and evolving state laws, understanding nexus has never been more critical.

What is Sales Tax Nexus?

Nexus refers to the connection between your business and a state that requires you to collect and remit sales tax. There are two main types:

• Physical Presence Nexus: Having offices, employees, inventory, or property in a state
• Economic Nexus: Exceeding sales or transaction thresholds in a state, even without physical presence

Why You Need a Nexus Study

Without proper nexus analysis, you risk:

• Unintentional non-compliance
• Costly state audits
• Penalties and interest charges
• Retroactive tax liabilities

What Does a Nexus Study Include?

A comprehensive nexus study examines:

• Your sales data by state
• Physical presence in each jurisdiction
• Economic nexus threshold analysis
• Transaction volume by location
• Remote employee locations
• Third-party logistics (3PL) relationships

When Should You Conduct a Nexus Study?

Consider a nexus study if you:

• Sell to customers in multiple states
• Have recently expanded operations
• Hire remote employees
• Use third-party fulfillment
• Attend trade shows out-of-state
• Have not reviewed nexus in 12+ months

Nexus Study Process

Our systematic approach includes:

1. Data Collection: Gather sales, transaction, and operational data
2. State-by-State Analysis: Review each state’s specific nexus rules
3. Threshold Evaluation: Compare your activity against economic nexus thresholds
4. Compliance Roadmap: Prioritize registration and compliance actions
5. Ongoing Monitoring: Track changes that might trigger new nexus

2026 Economic Nexus Thresholds

Most states use the following thresholds:

• $100,000 in annual sales, OR
• 200 transactions per year

However, specific thresholds vary by state and are subject to change.

Cost of Non-Compliance

The average penalty for sales tax non-compliance exceeds $50,000, plus:

• Back taxes owed
• Interest charges
• Audit costs
• Reputational damage

Getting Started

Contact our team for a confidential consultation to discuss your nexus requirements and compliance strategy.