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Monthly Checkpoint: Are You Monitoring Economic Nexus Correctly?

By Angel Person

Economic nexus requirements continue to evolve. This year, Illinois and Kentucky eliminated their 200-transaction thresholds, shifting the focus to sales volume only. Here are a few things to consider:

Are you using the current nexus thresholds?

  • Confirm your monitoring reflects recent state changes.
  • Review whether states use sales revenue, transaction counts or both.
  • Check which sales are included when calculating each state's threshold.

Are you measuring the right sales?

  • Determine whether exempt and resale transactions count toward the threshold.
  • Review how marketplace sales are treated.
  • Confirm your sales data includes all applicable entities and sales channels.

Could your business activities create physical nexus?

  • Review participation in conferences, trade shows and other business events.
  • Consider whether organizing or hosting events, providing on-site services or having employees work in another state creates physical nexus.
  • Determine whether these activities affect your existing sales tax registration.