Sales Tax Nexus & Compliance for SaaS
Written by Aparna Devalla, CPA
Curated by Rubric Financial
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Economic Nexus and the Wayfair Decision
- The 2018 South Dakota v. Wayfair Supreme Court ruling eliminated the physical presence requirement, allowing states to impose sales tax obligations based solely on economic activity.
- Most states have adopted economic nexus thresholds of $100K in sales or 200 transactions per year, though some states use only a dollar threshold or set different amounts.
- Economic nexus is evaluated on a rolling or prior-year basis depending on the state, and once triggered, you must register and begin collecting tax within a specified timeframe.
- SaaS companies selling nationally can unknowingly trigger nexus in dozens of states, creating significant compliance obligations that grow with revenue.
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