Sales tax glossary
What does physical nexus mean?
Physical nexus is a sales tax obligation created by a physical presence in a state. Common triggers include an office, store, warehouse, employees, inventory or sales reps working there. Once a seller has physical nexus, it generally must register and collect sales tax in that state, regardless of sales volume.
Full guide: What is physical nexus?
Example
A company stores inventory in a third-party fulfillment warehouse in another state. That inventory can create physical nexus there, even though the company has no staff in the state.
Why it matters for sellers
Physical nexus has no sales threshold, so a single trigger can create an obligation. It's easy to miss when remote employees or fulfillment networks spread your activity across states, so review where your people and inventory are at least once a year.
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Related terms
This definition is general information, not tax or legal advice. Rules vary by jurisdiction and change over time.
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