Intermediate Quick Answer
Does physical nexus still matter now that economic nexus exists?
⚡ TL;DR
Yes — physical nexus was not replaced by Wayfair. It remains a separate, no-threshold basis for sales tax obligations: a single day of inventory in a state creates nexus regardless of sales volume. FBA sellers commonly have physical nexus in 10–20 states where their inventory is distributed, including states where they've made very few sales.
Yes, completely. Physical nexus was not replaced or weakened by Wayfair. It remains a separate, immediate, no-threshold basis for sales tax obligations. For FBA sellers especially, physical nexus often creates more states of obligation than economic nexus.
Key takeaways
- Physical and economic nexus are independent, both are fully operative; either alone is sufficient to require registration
- Physical presence has no sales threshold: a single day of inventory in a state creates nexus; there is no minimum dollar amount or transaction count
- Economic nexus has a threshold ($100K or 200 transactions in most states) that takes time to cross, physical nexus is immediate
- FBA sellers frequently have physical nexus in 10–20 states where their Amazon inventory is distributed, including states where they’ve made very few sales
- The Wayfair decision only addressed economic nexus, it said nothing that limits or diminishes physical nexus rules, which predate Wayfair by decades
- Sellers conducting nexus audits must address both types separately: economic nexus analysis (threshold tracking) and physical nexus analysis (inventory, employees, facilities)
Frequently asked questions
Does physical nexus still matter after Wayfair?
Yes, completely. Physical nexus was not replaced by economic nexus, both remain independent, parallel bases for sales tax obligations. Physical presence creates nexus immediately with no dollar threshold. A seller with FBA inventory in a state has nexus there from the day inventory arrived, regardless of whether they've ever made a single sale into that state.
Which type of nexus is more likely to create unexpected obligations?
Physical nexus, for most ecommerce sellers. Economic nexus is visible, you can track your sales by state and see a threshold approaching. Physical nexus from FBA can be invisible — Amazon moves your inventory between fulfillment centers without your input, creating nexus in states you didn't choose and may not know about until an audit or a proactive review.
Looking for more answers on this topic?
Browse Physical Nexus & Inventory