What is Sales Tax Nexus Anyway?

Your business owes sales tax in any state where it has “sales tax nexus”. In short, if you have sales tax nexus you need to collect and remit sales tax. If you don’t have sales tax nexus, you generally don’t need to get a permit. 

Sales tax nexus is a legal term that means you have crossed a threshold and now have a sales tax collection responsibility in the state. Nexus can be created by having a physical presence, economic presence, or by other factors.  Nexus rules vary by state and retailers have specific nexus rules based on where they have people, property or inventory.  

What Should You Do Once You Determine You Have Sales Tax Nexus?

Once you determine that you have sales tax nexus in Oklahoma, your next step is to register for a sales tax permit in the state.  Check out our blog post on getting a sales tax permit in Oklahoma or more information about that process.  

If you are not interested in doing the work of getting the permit yourself, TaxValet can handle the permit registration for you with our Sales Tax Permit Registration Service.

Common Ways to Have Sales Tax Nexus in Oklahoma

1. Economic nexus in Oklahoma

If you have made $100,000 of sales in Oklahoma during the preceding or current calendar year, then you are required to register for, collect, and pay sales tax to the state. If you meet this threshold, it does not matter if you have a physical presence in Oklahoma.  Nexus has been created based on your volume of sales.

For more information see Oklahoma FAQ’s.

If you need help determining which states you have crossed economic nexus thresholds, check out our Sales Tax Starter Kit service.

IMPORTANT REMINDER regarding Notice and Reporting requirements: It is important to note that even if you do not cross economic nexus thresholds, you may cross Oklahoma’s “Notice and Reporting” requirements threshold if you make more than $10,000 in taxable sales (which includes marketplace sales). The reporting requirements are onerous and the penalties are extremely high for non-compliance. You can get around Oklahoma’s Notice and Reporting requirements by simply registering for a sales tax permit.

2. Physical presence nexus in Oklahoma

The following creates physical presence nexus in Oklahoma.  If you have any of the following in Oklahoma, you will need to get a sales tax permit:

1. An office, a distribution house, a sales house, a warehouse or any other physical place of business.
2. Having employees or agents operating in the state such as salespeople, brokers or buyers.
3. Delivery of merchandise into Oklahoma in taxpayer vehicles (not by common carrier).

For more information, please see OAC 710:65, pg 8.

If you need help determining which states you have a physical presence in, check out our Sales Tax Starter Kit service.

Uncommon Ways to Have Sales Tax Nexus in Oklahoma

Affiliate Nexus in Oklahoma

What exactly is affiliate nexus? Affiliate nexus can exist when a business has sufficient contact with a state through a separate business. If your out-of-state business has a relationship with an in-state business, then you may have affiliate nexus. 

Please keep in mind that an “affiliated business” does not necessarily mean that it is a marketing “affiliate” in the typical sense of the word. Instead, “affiliate nexus” refers to the relationship between two businesses.

You may have affiliate nexus if your business has ties to a business in Oklahoma that engages in any of the following:

1. Sells a similar line of products as the vendor and does so under the same or a similar name;
2. Uses trademarks, service marks, or trade names in the state that are the same or substantially similar to those of the vendor;
3. Delivers, installs, assembles or performs maintenance services for the vendor;
4. Facilitates the vendor’s delivery of property to customers by allowing the vendor’s customers to pick up property sold by the vendor at an office, distribution facility, warehouse, storage place or other place maintained by the person in the state; or
5. Conducts any other activities in the state of Oklahoma that are significantly associated with the vendor’s ability to establish and maintain a market for the vendor’s sales.

For more information, see House Bill 2531.

Do You Need a Sales Tax Permit in Oklahoma If You Only Sell on Marketplaces?

If you are an out-of-state online retailer who ONLY sells on approved marketplaces (such as Amazon, eBay, etc), Oklahoma sales tax will be remitted by the marketplace and you do not need to get a sales tax permit. 

For more information about this please see Oklahoma FAQ’s.

If you are an e-commerce seller who is unsure of where you need to get a sales tax permit, feel free to check out our Sales Tax Starter Kit service.