Sales Tax Terms

What is Sales Tax?

A sales tax is a tax paid to a governing body for the sales of certain goods and services. Source

What is a Use Tax?

A tax on goods and services that is paid to a governing body directly by consumer. Source

What is Nexus (as it relates to online sales tax)?

A level of connection between a taxing jurisdiction (like a state) and an entity (such as a business). Each state handles this difference, and thus the state needs to be in consideration when evaluating sales tax. Previously this connection was partly defined by the physical presence needed to create nexus. However, in South Dakota v. Wayfair the court ruled to eliminate the physical rule, opening nexus to be reached in e-commerce sites. Source