Sales tax nexus rules are complex, and their triggers aren’t always what you’d expect.
Every business model carries its own set of risks, and every state defines “doing business” differently. Together, those two facts make staying compliant feel like a moving target.
On top of that, many software solutions track only economic nexus, and other types of nexus can slip through if left unchecked.
But complexity doesn’t have to equal chaos. Once you understand how and where nexus is created, it becomes much easier to manage confidently and avoid costly surprises down the line.
In this blog, we’ll explain the main types of sales tax nexus, walk through 7 sales nexus triggers businesses often miss, some pitfalls that come from relying on software, and how you can avoid them altogether.
The Main Types of Sales Tax Nexus
Nexus is what creates a legal obligation for your business to collect and remit sales tax in a state.
The tricky part is that each state defines it differently, based on how it views “doing business” within its borders.
These are the types of sales tax nexus businesses run into most often:
- Physical nexus happens when you have a tangible footprint in a state.
- Economic nexus is based on sales or transactions thresholds, and in some cases, both.
- Click-through or affiliate nexus can come from digital activity, such as through in-state affiliates.
- Advertising nexus occurs when marketing or promotional activity targets customers in a state.
- Marketplace nexus comes from marketplace facilitator laws, which require platforms like Amazon, Walmart, and Etsy to collect and remit sales tax on behalf of sellers. That means you usually don’t need to collect tax on those marketplace sales yourself. However, sometimes those sales still count toward your economic nexus thresholds, depending on the state. If you pass a state’s threshold when marketplace and direct sales are combined, your business may still have to register and file returns there.
- Agency nexus is created when contractors or service providers act on your behalf within a state. A short installation, repair, or service visit can qualify as doing business there.
Understanding these categories is the first step in spotting obligations before they turn into liabilities.
7 Sales Tax Nexus Triggers Businesses Often Overlook
Each type of nexus shows up differently in the real world. Below are seven situations where businesses often (and unintentionally) create new obligations, and how to stay ahead of them.
Trigger 1: Attending Trade Shows
Setting up a booth at a trade show can trigger physical nexus.
Many US states, such as Texas, New York, and California, regard even short-term trade show attendance to be a form of business activity. In some cases, your presence alone can create a filing obligation, even if no sales occur.
With sales tax rates in these states ranging between 6% and 9%, plus potential penalties of 25% to 40%, unregistered activity adds up quickly.
Trigger 2: Hiring Remote Employees or Contractors
Hiring a remote employee or contractor in another state can trigger physical nexus.
Some states, like New Jersey and Massachusetts, treat a single worker as enough to establish a presence. Others, like California, go further by counting independent contractors the same as employees.
So, once a remote employee is on your payroll, your business is officially “doing business” in that state.
Once again, relying only on software is risky because it has no way of knowing if you hired someone in another state. As such, it can’t warn you that you now have a physical presence in a new state.
Trigger 3: Storing Inventory with 3PLs or Amazon FBA
Even if your company has no offices or staff in a state, placing goods in a third-party warehouse can create a physical nexus.
What makes this tricky is that fulfillment providers, including Amazon, often move stock between warehouses in different states without notifying sellers, and sellers have no control over where those products go.
For marketplace-only sellers, this presence doesn’t usually create financial exposure, since the marketplace collects and remits sales tax.
But if you also sell through your own channels (like Shopify, BigCommerce, or wholesale), that same FBA inventory can trigger tax obligations across multiple states.
As with other nexus triggers, sales tax software won’t catch these movements automatically because those transfers are recorded in internal reports. Without regular reviews of these reports and inventory locations, new filing obligations can go unnoticed for months.
Trigger 4: Targeted Ads in Other States
Running digital ads in other states can quietly create advertising nexus. This can happen even if those ads never lead to a single sale.
Many businesses overlook the risk because ad platforms like Google and Meta make it easy to run campaigns nationwide. Even if your campaign isn’t intentionally targeted, it can still display to users across state lines, which can count as “doing business” in some jurisdictions.
States like Washington and Louisiana have clarified that sustained marketing activity directed toward in-state consumers may qualify as doing business there.
A related concept, click-through nexus, applies when an in-state website, blogger, or affiliate earns commissions for referring customers through online links.
Future-Proof Your Sales Tax Setup
We totally get it. Your job, your expertise, is not reading through complicated legal statutes that vary from state to state. And nobody builds a business with the intention of spending countless hours tracking state nexus thresholds.
On top of that, a lot of companies are routinely burned by sales tax software, believing it’s accurately managing their compliance for them, only to learn later that it’s often not the case.
But there is hope, if you have the right combination of tech and human oversight.
Our upcoming webinar, How to Future-Proof Your Sales Tax Setup in 2026, walks you through where software falls short, how to reduce compliance risks, and when to bring in human experts.
You’ll also get exclusive access to a maturity model that outlines when software might be enough to meet your sales tax needs and when to seek professional support.