Sales Tax Glossary
Plain-English definitions of the sales tax terms multi-state sellers actually run into. Each entry is answer-first and cited to primary sources.
Nexus & obligations
Economic Nexus
Economic nexus lets a state require sales tax collection once your remote sales cross its thres
Sales Tax Nexus
Sales tax nexus is the link between your business and a state that requires you to collect its
Physical Nexus
Physical nexus is sales tax obligation from a tangible presence — office, employees, or invento
Click-Through Nexus
Click-through nexus makes you collect a state’s sales tax when in-state affiliates refer sales
Marketplace Nexus
Marketplace nexus shifts sales tax collection to platforms like Amazon and Etsy.
Trailing Nexus
Trailing nexus keeps your sales tax collection duty alive for a period — often a calendar year
Wayfair Decision
South Dakota v.
Quill v. North Dakota
Quill v.
Tax types & base
Use Tax
Use tax is the complementary tax you owe when you use taxable goods in a state but no sales tax
Sales Tax vs Use Tax
Sales tax is collected by the seller at purchase; use tax applies when no sales tax was charged
Seller’s Use Tax
Sellers use tax is the tax a remote, out-of-state seller collects and remits on sales into a st
Consumer Use Tax
Consumer use tax is the tax a buyer self-assesses and remits when no sales tax was charged — co
Gross Receipts Tax
A gross receipts tax is a tax on a business’s total revenue — like Washington’s B&O or Ohio’s C
Transaction Privilege Tax
Transaction privilege tax is Arizona’s sales-tax equivalent — a tax on the privilege of doing b
Tangible Personal Property
Tangible personal property is physical, movable property — the default taxable category for sal
Taxability
Product taxability is whether a given product or service is subject to sales tax in a given sta
SaaS Taxability
Is SaaS taxable? It depends on the state — roughly 20+ states tax Software-as-a-Service while o
Digital Goods Taxability
Are digital products taxable? It varies by state — some tax all digital goods, some none, and s
Bundled Transaction
A bundled transaction sells taxable and non-taxable items for one non-itemized price.
Sourcing & rates
Destination-Based Sourcing
Destination based sales tax sets the rate by the buyer’s ship-to address.
Origin-Based Sourcing
Origin based sales tax sets the rate by the seller’s location, not the buyer’s.
Origin vs Destination
Origin vs destination sourcing decides which jurisdiction’s rate applies to a sale.
Situs
Tax situs is the location assigned to a transaction for tax purposes — it decides which state o
Compliance lifecycle
Sales Tax Permit
A sales tax permit is the state license that authorizes you to collect sales tax.
Sales Tax Registration
How to register for sales tax: once you have nexus, register with the state DOR — directly or v
Resale Certificate
A resale certificate lets a buyer purchase inventory tax-free for resale.
Exemption Certificate
An exemption certificate documents a tax-free sale — resale, nonprofit, manufacturing, or gover
Sales Tax Exemption
A sales tax exemption makes a sale not subject to tax — based on the product, its use (resale,
Sales Tax Return
A sales tax return is the periodic filing reporting tax you collected.
Filing Frequency
Sales tax filing frequency is how often a state makes you file — monthly, quarterly, or annuall
Prepayment
Sales tax prepayment is a required advance payment of estimated tax before your return is due,
Zero Return
A sales tax zero return is a return you file even when you collected $0.
Remittance
Sales tax remittance is paying the tax you collected to the state.
Audit & remediation
Sales Tax Audit
A sales tax audit is a state DOR review of your records.
Audit Defense
Sales tax audit defense is professional representation during a state audit — challenging sampl
Voluntary Disclosure Agreement
A voluntary disclosure agreement lets you report past uncollected sales tax in exchange for a l
Back Taxes / Backfiling
Backfiling means filing overdue sales tax returns for past periods after you discover an unmet
Nexus Study
A nexus study reviews where your business has physical and economic nexus, then maps your sales
Penalty & Interest
Sales tax penalties are charges states add for filing or paying late, plus interest on the unpa
Marketplace & ecom
Marketplace Facilitator
A marketplace facilitator like Amazon or Etsy must collect and remit sales tax for its third-pa
Marketplace Seller
A marketplace seller sells through a platform like Amazon or Etsy.
Drop Shipment Tax
Drop shipping sales tax involves three parties — customer, retailer, supplier.
Streamlined Sales Tax (SST)
Streamlined Sales Tax (SST) is a multi-state agreement that simplifies registration, definition
Certified Service Provider
A Certified Service Provider (CSP) is an agent certified under Streamlined Sales Tax to handle