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 Virginia, 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 Virginia 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 Virginia

1. Economic nexus in Virginia

If you made $100,000 or more of sales or at least 200 sales transactions in Virginia, 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 Virginia.  Nexus has been created based on your volume of sales.

For more information see Code of Virginia  § 58.1-612.

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

2. Physical presence nexus in Virginia

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

1. Office – Maintains or has, directly or through an agent or subsidiary, an office, warehouse, or place of business of any nature;
2. Employees – Solicits business by employees, independent contractors, agents or other representatives;
3. Advertising – Advertises in newspapers or other periodicals printed and published in Virginia, on billboards or posters located in Virginia, or through materials distributed in Virginia by means other than the United States mail;
4. Deliveries – Makes regular deliveries of tangible personal property within Virginia by means other than common carrier. A person shall be deemed to be making regular deliveries hereunder if vehicles other than those operated by a common carrier enter Virginia more than 12 times during a calendar year to deliver goods sold;
5. Solicitation – Solicits business in Virginia on a continuous, regular, seasonal, or systematic basis by means of advertising that is broadcast or relayed from a transmitter within Virginia or distributed from a location within Virginia;
6. Installation, Servicing and Repairs – Solicits business in Virginia by mail, if the solicitations are continuous, regular, seasonal, or systematic and if the dealer benefits from any banking, financing, debt collection, or marketing activities occurring in Virginia or benefits from the location in Virginia of authorized installation, servicing, or repair facilities;
7. Real or Personal Property – Owns real or personal property in Virginia. 

For more information, please see the Code of Virginia  § 58.1-612.

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 Virginia

1.  Affiliate Nexus in Virginia

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.

If any of the following apply to your relationship with a business in Virginia, affiliate nexus has been established:

1. Being owned or controlled by the same interests that own or control a business in Virginia;
2. Having a franchisee or licensee registered and operating under the same trade name in Virginia.

For more information about affiliate nexus in Virginia, see  Code of Virginia  § 58.1-612.

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

If all of your sales into Virginia are with a marketplace facilitator (such as Amazon, eBay, etc), Virginia 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 Marketplace Sellers – Do you need to register to collect sales tax?  

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.