What nexus is. Nexus is the connection that gives a state the right to tax you. Two kinds: physical nexus — an office, a warehouse, inventory in Amazon FBA or a third-party fulfillment center, employees, sales or installation staff in the state; and economic nexus — no people or goods in the state at all, but sales or order counts into the state that reach the threshold in the previous or current calendar year (every sales-tax state adopted this after the Supreme Court's 2018 Wayfair decision).
How the thresholds work. Most states use $100,000. California, Texas and New York use $500,000 (New York also requires 100 transactions); Alabama and Mississippi use $250,000. Roughly a third of states still keep an "or 200 transactions" test, which a low-ticket seller can trip long before $100,000. The measurement base also differs: some states count all sales including marketplace orders, some count only taxable retail sales, some include wholesale and exempt sales. This is where most sellers get the math wrong.
Marketplace collection is not a pass. Amazon, Walmart, TikTok Shop and eBay collect and remit on marketplace orders under each state's marketplace-facilitator law. Shopify, your own store, B2B invoicing and trade-show sales are collected and filed by you — and the states holding your FBA inventory often require registration on the strength of inventory alone, even if every sale there came through the marketplace.
What happens if you miss it. Tax you should have collected is assessed against you — paid out of your margin, plus penalties and interest, usually with no limitations period because an unfiled return never starts the clock. Tax you collected and did not remit is worse: it is trust-fund money, and responsible persons can be held personally liable. The good news is that almost every state runs a voluntary disclosure program: apply before the state contacts you, and penalties are generally waived with the look-back limited to three or four years.
