Economic Nexus Policy

Economic Nexus Policy refers to a legal standard that determines a business's tax obligations based on its economic activities within a state, rather than its physical presence there. Essentially, if a company sells a certain amount of goods or services in a state—regardless of having a physical store or office—it may be required to collect sales tax. This policy arose from the need to adapt tax systems to the growth of online shopping and ensures that businesses contribute fairly to state revenues, based on their economic impact in that state.