One of the most common misconceptions in sales tax compliance is when nexus actually begins.
Many businesses believe nexus starts when they register with a state or file their first return. In reality, nexus almost always begins earlier than that.
Understanding trigger dates is essential for evaluating exposure accurately and avoiding unnecessary mistakes.
What a nexus trigger date really is
A nexus trigger date is the point in time when a business crosses a threshold or establishes presence that creates a sales tax obligation.
This date is determined by:
- Activity
- Volume
- Presence
- Transactions
It is not determined by paperwork.
Why registration dates are misleading
Registration is an administrative action. It reflects when a business chose to acknowledge obligations, not when those obligations began.
If a business:
- Crossed an economic threshold months earlier
- Hired an in-state employee
- Stored inventory in a warehouse
- Began taxable activity
then nexus may have existed long before registration occurred. Using registration dates as a proxy for nexus start often understates exposure.
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How economic nexus trigger dates are created
Economic nexus trigger dates typically occur when:
- Revenue thresholds are exceeded
- Transaction count thresholds are crossed
- Combined thresholds are met
Most states measure these thresholds over a rolling or calendar-based period.
The trigger date is usually:
- The date the threshold was crossed
- Or the beginning of the next defined period, depending on state rules
This is rarely obvious without deliberate analysis.
Why economic nexus trigger dates are easy to miss
Economic nexus thresholds are often crossed quietly.
Common reasons include:
- Sales accelerating late in the year
- Thresholds being exceeded by a small margin
- Revenue spread across many customers
- Fragmented data across platforms
There is no automatic notification when this happens.
How physical nexus trigger dates differ
Physical nexus trigger dates are tied to specific events, such as:
- Employee start dates
- Inventory placement
- Contract execution
- Project commencement
These dates are often easier to identify, but still frequently overlooked when activity is indirect or temporary.
Why trigger dates matter more than totals
Two businesses with the same revenue can have very different exposure depending on timing.
Trigger dates determine:
- How many periods may be impacted
- Whether exposure is historical or current
- Whether penalties or interest may apply
- Whether certain programs or remedies are available
Timing shapes the entire compliance strategy.
Trigger dates do not dictate immediate action
Discovering an early trigger date does not mean a business must immediately file back returns.
Trigger dates inform:
- Scope
- Risk
- Options
- Sequencing
They allow teams to decide how to proceed rather than reacting blindly.
Common mistakes businesses make with trigger dates
Frequent errors include:
- Using registration dates as nexus start
- Ignoring partial-year thresholds
- Assuming small overruns do not count
- Overlooking employee-based nexus
- Treating marketplaces as a full shield
These mistakes distort exposure analysis.
How experienced teams use trigger dates properly
Experienced finance teams:
- Identify trigger dates by state
- Separate economic and physical triggers
- Validate thresholds using real data
- Align trigger dates with taxability analysis
- Use timing to prioritize action
This produces defensible and controlled outcomes.
Trigger dates create clarity, not pressure
Knowing when nexus began is about understanding reality, not assigning blame.
It allows businesses to:
- Quantify exposure accurately
- Avoid unnecessary filings
- Reduce long-term risk
- Choose the right moment to act
Without trigger dates, every decision becomes guesswork.
Nexus timing is foundational
Sales tax nexus is not just about where obligations exist.
It is about when they began. That timing determines everything that follows.
