What counts as nexus

Jessica_Nyquist
New Member
4 0 0

I am an Oregon based seller, and I buy my products from Massachussetts. I don't do dropshipping, or have a warehouse, etc. Do I need to put Massachussetts as a Nexus location if I just buy my products from there. 

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Gilco_Digital
Shopify Expert
95 0 9

As far as I know, it doesn't really matter where you purchase your product from, I may be wrong though.

Gilco Digital

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Shopify Experts | www.gilcodigital.com | gilcodigital@gmail.com
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Sharon15
Pathfinder
99 0 29

Hi Jessica,  I'm not an accountant, just a fellow shop-owner, so take this with the usual grain of salt that you should apply to any internet advice.  :-)  But here is what I learned when setting up my shop (where I use a combination of dropshipping and in-house inventory purchased from wholesalers).

Since you don't dropship, MA is not a nexus for you.  It would only be a nexus if you stored inventory there, or worked with a dropshipper there (dropshipping laws are tricky, sometimes they constitute nexus in some states and sometimes they don't!).

Your MA wholesaler should have asked you for a copy of a reseller's permit from your home state.  The reseller's permit is something they can show their state authorities to prove that they legally transferred the goods to you and it's your job to collect and remit sales taxes as per law.  It sounds to me like your nexus is only your home state, so you'd only collect sales tax for customers in your home state.  (Do check with an accountant or attorney to verify this, though.)

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Bryce_Mullen
Tourist
5 0 1

Jessica,

To have nexus in a state is usually (as I understand it) defined as operating in that state, this includes warehousing inventory in that state. It has nothing to do with purchasing inventory. Other answers have touched on this.

This is just half of the picture though, most sellers don't realize that there are state laws on "Click-Through Nexus." Which means a state can have a law stating if you sell over a certain threshold in that state, regardless of seller origin, you would have to have a sellers permit. Which means you have to collect and remit sales tax for that state. Now I don't know how this affects other sellers, but it is something to look into. Click-through nexus is even more complicated than sales tax nexus, each state has its own laws.

All this to say, you need to ask an accountant that understands nexus and its effects on your business. Here are some articles that go into a little more detail.

http://blog.taxjar.com/click-through-nexus/

http://blog.taxjar.com/states-charge-sales-tax-click-thru-nexus/

 

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