Economic Nexus Monitoring for Outdoor Retailers in 2025

Outdoor e-commerce retailers must stay informed about their economic nexus requirements. Whether you supply kayaks, canoes, apparel, or camping gear, the demands for remote sellers to remit sales tax based on unique state laws will be a significant aspect of keeping your business compliant. 

Understanding Economic Nexus and Its Impact on Outdoor Retailers

What is Economic Nexus?

Economic nexus directly refers to remote sales and online sales. A remote seller is an online retailer that sells products online to customers and ships them out of state.

Economic nexus is created when a business establishes a sales tax obligation as an out-of-state retailer because of its sales amounts.

Differences Between Physical Nexus and Economic Presence

Economic nexus must be distinguished from physical nexus. Physical nexus is created when someone has a physical presence in a state, such as a building, warehouse, or employees.

When physical presence has been established in a state, the business must apply for a sales tax license and remit sales tax when taxable sales are made there.

Key Implications of the Wayfair Supreme Court Decision

Before 2018, states could only require those with a physical presence in their state to collect sales tax. However, due to a Supreme Court decision in South Dakota v. Wayfair, states can establish economic sales tax laws to require out-of-state sellers to collect and remit sales tax.

Why Monitoring Economic Nexus is Crucial

Each state sets its own economic nexus thresholds. Monitoring these thresholds frequently helps business owners be proactive rather than reactive in their nexus management and sales tax obligations.

Managing Tax Obligations for Remote Sellers and Small Businesses

When remote sellers and small business owners know their economic nexus requirements, they can better manage their sales tax obligations. Remote sellers — those without a physical presence in customer states — must proactively manage multi-jurisdictional tax obligations.

While most states provide a grace period before enforcement, they still expect timely registration and compliance once a threshold is crossed.

Small outdoor retailers face additional complexity because many platforms, such as Etsy or Amazon, act as marketplace facilitators.

While these facilitators often handle sales tax collection on behalf of sellers, the retailer remains responsible for understanding and documenting where tax has been collected and remitted.

Impact of Cross-Border Sales on Compliance Obligations

As a growing e-commerce business, you are likely familiar with making out-of-state sales. But with this comes a new layer of laws and requirements. Monitoring economic nexus laws will help you determine the impact of cross-border sales and compliance obligations.

Key Economic Nexus Laws and State-Specific Requirements

South Dakota v. Wayfair: The Game-Changing Court Ruling

The Wayfair decision fundamentally redefined sales tax obligations for remote sellers and online businesses. Before the Supreme Court's decision, states could not require out-of-state sellers to collect sales tax unless they had a physical presence. After Wayfair, economic activity alone became sufficient.

For outdoor retailers, this means that both online and catalog sales count toward nexus sales thresholds. Once those thresholds are met, registration and compliance become legally required.

The decision also emphasized the number of transaction thresholds (like the 200-transactions threshold), which can apply even to low-dollar-volume retailers making frequent small sales, such as those selling accessories, apparel, or repair parts.

Understanding Requirements Across U.S. States

A state's economic nexus threshold may differ from that of another particular state. For instance, a business owner in New York creates an economic nexus when they make $500,000 in sales and more than 100 sales in the prior four sales-tax quarters.

On the other hand, in New Jersey and Rhode Island, you create an economic nexus by making $100,000 in sales or 200 transactions in the current or prior calendar year.

Furthermore, thresholds in North Dakota are $100,000 in sales in the previous or current calendar year; in New Mexico, they are $100,000 in sales in the previous calendar year; and in New Hampshire, there is no sales tax collection requirement.

As you can see, there are many nuances to economic nexus requirements.

How Outdoor Retailers Can Manage Economic Nexus Effectively

4 Best Practices for Nexus Monitoring

1. Regularly tracking total sales, sales volume, and transaction counts is one of the best ways to monitor the economic nexus.

2. Leveraging sales data from POS systems like Shopify can be invaluable for accurately tracking sales and transactions.

3. Understanding lookback periods and annual sales requirements will help you track your obligations properly.

4. Staying in tune with nexus requirements yearly will help you track your economic activity based on any updates in sales tax laws. For instance, a good rule of thumb is that if you are approaching $100,000 or 200 transactions in a given state for the previous or current calendar year, it is a good time to check out the state's nexus requirements.

Filing for a Sales Tax Permit in 5 Easy Steps

1. Typically, the first benchmark for filing for a sales tax permit is meeting a state’s threshold for gross revenue or sales activity.

2. You will want to register with that state and establish your first date of sales for the date when you were required to collect sales tax.

3. After completing your sales tax registration, create an online account to file and pay sales tax online.

4. Handling taxable sales and exempt sales properly is the next step. For instance, you will want to configure your POS to recognize exempt sales, such as sales to non-profits, out-of-state sales for which you have not created economic nexus, and nontaxable service or class sales. On the other hand, you may need to turn on sales tax collection for states in which you have created economic nexus, which is why it is crucial to monitor your nexus obligations regularly, as you will be required to remit sales tax to the state even if you do not collect it.

5. Registering in new states and managing effective dates is highly important for sales tax compliance. Every state has its own approach to economic nexus thresholds and when you must register. However, once those requirements are met, you must register with that state and establish an online account to file and pay. Therefore, you will want to check your sales and transaction volume frequently and complete these steps when crossing new thresholds.

Challenges of Economic Nexus for Outdoor Retailers

Managing Local Tax Obligations Across State Lines

Managing local sales tax can be easy with a POS. However, to achieve the desired results, you may need to integrate an app such as Avalara.

When selling across state lines, what you want to be able to determine from your POS is the destination in which sales were made, taxable sales attributable to that destination, and the amount of sales tax you collected.

Marketplace Facilitator Laws

Marketplace facilitator laws may also apply. Marketplace facilitators collect and remit sales tax on behalf of clients for their marketplace sales. For instance, when a marketplace seller sells their products on Amazon, Amazon collects sales tax for the seller and remits it to the state.

As a result, some states do not take marketplace facilitator sales into account in their threshold amounts. Nevertheless, some states do consider those amounts. You will want to be aware of these nuances if you sell through a marketplace facilitator.

Handling Digital Products and Tangible Personal Property Sales

Another consideration is handling digital products and tangible personal property sales. Outdoor retailers offering digital downloads such as trail maps, GPS apps, or membership subscriptions face unique compliance issues.

Some states tax digital goods at the same rate as tangible products, while others exempt them entirely. Businesses must therefore map product categories to the correct tax codes to avoid overcharging or underpaying taxes.

Meanwhile, sales of tangible personal property — such as camping gear, hiking boots, and fishing equipment — are almost always taxable. Retailers should maintain detailed SKU-level tracking to ensure accurate taxation and reporting.

Ensuring Proper Use of Exemption Certificates

Ensuring proper use of exemption certificates when selling to non-profit organizations or wholesalers will help you determine when sales are nontaxable.

Balancing Business Needs with Compliance Obligations

Adjusting to new state legislation and changing tax rates must be a part of your business activities. Staying in tune with updates in tax rates and economic nexus laws will help ensure you do not need to fear in the event of an audit.

Once again, it is crucial to choose your POS wisely. Furthermore, you may want to use tax software to streamline your sales tax filing needs and provide you with real-time sales tax rates.

By staying informed of sales tax laws, you can also help reduce audit risk, avoid tax

liabilities, and comply with sales tax requirements.

What Outdoor Retailers Should Focus on for Nexus Compliance

Stay Updated on Economic Nexus Requirements

Stay updated on economic nexus requirements in the current year—research topics related to economic nexus. Find a sales tax guide that lists the dollar threshold amounts and sales transaction amounts for each state. Monitor your sales by dollar and transaction amounts regularly.

Consult a Sales Tax Expert

While some may be able to sort through the complexities of the changing landscape of sales tax nexus laws, others may not have the time or interest to do so. If you would prefer to consult a sales tax expert to help navigate compliance effectively, please don’t hesitate to contact us today.