Does Your Business Need A Nexus Study? Everything You Should Know Now

[Originally published February 16, 2023. Updated May 2025]

These days, most companies conduct business across state lines. Even if you think you’re compliant, there may be taxes and fees you’re unaware of. A nexus study may be the best step for your organization to take to ensure you are meeting all of your sales tax liabilities.

Keep reading to learn what a nexus study is, if your organization needs one, and how Miles Consulting Group can help.

Here’s what we’ll cover:

Article Index

Step 1: Understand What a Nexus Study Is

• Explanation of sales tax nexus and how it’s created (physical, economic, affiliate, click-through, and cookie nexus).
• Examples of business activities that trigger nexus in different states.
• Overview of economic nexus thresholds in key states.
• Definition of a nexus study and what it uncovers about your tax obligations.

Step 2: Know Why a Nexus Study Matters

• The risks of registering without knowing when nexus began.
• How a nexus study helps quantify exposure and plan next steps.
• The role of a nexus study in ensuring accurate registration and avoiding penalties.
• How it supports due diligence in M&A transactions.

Step 3: Let the Experts Guide You

• How Miles Consulting Group customizes each nexus study.
• Key questions we help answer (e.g., nexus type, product taxability, exemptions).
• Support with Voluntary Disclosure Agreements (VDAs), registration, and documentation.
• Next steps after a nexus study is complete—ongoing compliance and strategic support.

Want to know more? Want to know more? Let’s talk. Reach out to us at info@milesconsultinggroup.com.

1. What Is a Nexus Study?

Let’s first clarify what nexus is. Sales tax nexus occurs when your company has some sort of connection to a state that has a sales tax. Although 45 states and the District of Columbia have a state-level sales tax, the laws that create sales tax nexus can vary slightly state by state. Overall, most states agree that a physical or economic presence creates nexus.

These days, the definition of nexus has broadened significantly. In addition to physical and economic nexus, companies must now consider affiliate nexus, click-through nexus, and even cookie nexus in some states. For instance, click-through nexus rules can apply if you generate sales via affiliates (such as bloggers or influencers) located in another state, like those under the Amazon Associates Program. Cookie nexus, as seen in Massachusetts and Colorado, applies when a company installs cookies or tracking scripts on devices in a state, thereby establishing nexus without any physical or affiliate presence.

To better understand the different types of nexus, here’s a high-level summary:

Types of Nexus

What are ways that a business can create nexus in a state? Below are examples of physical presence creating nexus:

• Having an office in a state
• Having an employee, salesperson, contractor, or remote worker in a state
• Owning a warehouse or storage facility in a state
• Storing inventory in a state (such as in an Amazon FBA warehouse or other 3rd party fulfillment center)
• Temporarily doing physical business in a state for a limited amount of time, such as at a trade show or craft fair

And of course, economic nexus is created by crossing certain sales thresholds—either dollar or number of sales. To give some perspective, here’s a quick comparison of economic nexus thresholds for 10 popular states:

Now that you know how nexus is created, what is a nexus study?

A nexus study is a comprehensive process to analyze and review all your business activities and sales in a state (or states) to determine if—and when—they create sales tax nexus. A nexus study is often the first step toward compliance. It tells you where you have sales tax obligations, when they started, and what next steps should be taken.

We often describe it as a snapshot of your sales tax situation at a moment in time to determine:

• a) if you have created nexus in the past and therefore have a retroactive filing responsibility
• b) the dollar amount of retroactive exposure, interest, and penalties
• c) a remediation and forward-looking compliance plan

2. What Are the Benefits of Doing a Nexus Study?

We talk daily with potential clients who want to be compliant but are unsure where to begin. A common question is, “Can I just register and start collecting now?”

Unfortunately, no. Most states require companies to indicate exactly when nexus was created on their registration forms—often signed under penalty of perjury. If it was three years ago, the state may want tax and interest for those three years. Many companies are unaware of this or unprepared to pay those back taxes.

That’s where a nexus study comes in. It helps you:

• Diagnose the extent of your exposure
• Develop a remediation plan (such as a Voluntary Disclosure Agreement, or VDA)
• Understand ongoing obligations and filing requirements
• Clarify registration timelines and nexus triggers

It’s also a useful tool if you believe you’ve been compliant but want to confirm your current status—especially when considering nexus duration rules, like trailing nexus, which may require continued filings even after business activity ceases in a state.

A nexus study is particularly helpful ahead of a merger or acquisition. Buyers always conduct sales tax due diligence. Sellers can strengthen their position by proactively resolving any exposure before the deal is on the table.

3. How Can Miles Consulting Group Help?

We tailor each nexus study to the specific client, asking the right questions to ensure your obligations are clearly understood and documented:

• Do you have physical presence nexus?
• Do you have economic nexus?
• Are your products or services taxable?
• Are there available exemptions (e.g., food, medical, nonprofit sales)?
• Do you need to collect and remit sales and use tax?
• Have you collected but not remitted tax?
• Are you involved in an M&A transaction? Let’s find those skeletons before the buyer does.

If we uncover exposure, we can assist with:

• Voluntary Disclosure Agreements (VDAs)
• Registration support
• Documentation of exposure

Once you have completed a nexus study and established where you have liabilities, what are the next steps? 

After we determine your liabilities, Miles Consulting Group can continue to support you through your compliance journey. When we determine possible exposure, we help clients receive maximum benefit from available amnesty programs, contract for voluntary disclosure agreements or simply document their exposure if that is all that is needed at that point. 

If you have any questions or are interested in moving forward with a nexus study, contact Miles Consulting now.