Economic nexus allows a state to require a company to collect and remit sales tax if their sales in that state exceed a certain threshold, even if the company has no physical presence in that state. This concept was established by the Supreme Court in the case South Dakota v. Wayfair, Inc. in 2018.

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Economic Nexus

Question 55

Multiple Choice

Economic nexus:

A) May exist even though a firm has no physical presence in a state.
B) Does not create taxing jurisdiction under the Commerce Clause of the U.S. Constitution.
C) Requires a greater physical presence than traditional definitions of nexus.
D) Applies only to Internet business activities.

Correct Answer: