Physical Presence Nexus

Definition

Physical presence nexus is the traditional standard by which a state gains the right to impose tax obligations on a business because the business has some tangible footprint in that state, such as an office, warehouse, inventory, or employees. A remote employee working from their home in another state can be enough to create physical presence nexus for their employer in that state. This can trigger income tax filing requirements, payroll withholding obligations, and even sales tax registration duties.