Question

Which of the following will automatically create sales and use tax nexus between a state and a business assuming the Wayfair rules are in addition to prior rules?

a. Physical presence in the state
b. Economic presence in the state
c. Occasional sales in the state
d. No nexus requirements

Answer 1

Sales and use tax nexus can be automatically created by either a physical presence or an economic presence in a state, according to the post-Wayfair rules.

Step-by-step explanation:

The question deals with the concept of sales and use tax nexus, particularly in the context of state and business relationships following the South Dakota v. Wayfair, Inc. decision. The Wayfair rules have established that:

Physical presence in a state, such as a store or warehouse, will automatically create sales and use tax nexus.Economic presence in a state, such as reaching a certain threshold of sales or transactions, can also establish nexus, even without a physical presence.

Occasional sales in a state typically do not create nexus unless those sales reach the economic thresholds established by each state. The lack of any nexus requirements would imply that there's no connection between the state and the business for tax purposes.

The correct answer is b. Economic presence in the state.