Hidden Nexus Risks: How Remote Employees Establish Physical Presence In A State

Since the pandemic reshaped the way we worked, one ripple effect has stuck around: remote work. And while remote work has been shown to increase productivity in many industries (see the figure below), it also increases something a little less exciting—sales tax nexus exposure.

When employees work from other states—whether full-time remote, hybrid, or traveling—your business may inadvertently create physical presence nexus in those states. And if you have physical nexus in a state, you will need to register, collect, and remit sales tax there.

This guide explains how remote and traveling employees create nexus, highlights state positions, and gives you practical steps to protect your business from surprise obligations, penalties, or late filings.

Key Takeaways

• One remote employee can create physical nexus, even without an office, warehouse, or inventory in that state.
• States are increasingly direct that remote workers performing activities such as sales, service calls, demos, installations, or using local media for advertisements trigger nexus.
• Nomad workers who travel and work from multiple states can create more widespread exposure than businesses realize.
• State rules vary, but some have published guidance on remote-worker nexus after the pandemic.
• Businesses should map employees’ locations, evaluate risk-level activities, update policies, and ensure compliance to avoid penalties.

How Remote Workers Create Sales Tax Nexus

Most states follow a core principle: if your employee performs business activities within a state, you can be considered to have physical presence there.

That presence does not require a leased office or a stocked warehouse. An at-home office, vendor booth, or subcontractor can be enough.  

Common activities that trigger nexus

Sales-generating activity

• Soliciting or closing sales
• Meeting prospects or customers
• Taking or processing orders
• Contracting another person to solicit sales or potential customers
• Selling or distributing from a company-owned vehicle

Hands-on or service work

• Construction work
• Installation, repair, or maintenance services
• On-site troubleshooting or service calls
• Warranty work

Operational or administrative support

• Managing or staging inventory
• Handling returns
• Conducting administrative work tied to business operations
• Having at-home employees that live within the state

How States Handle Remote and Traveling Workers

Below is a table summarizing how several states approach remote worker physical nexus, as well as key triggers businesses should watch for.

State	How the State Approaches Remote Workers and Nexus	Key Triggers
Colorado	A retailer “doing business” in Colorado is subject to sales tax licensing if the retailer maintains any place of business directly, indirectly, or by a subsidiary. A remote worker’s home office can count. Colorado home-rule cities may also require separate registrations.	– Remote employees in Colorado – Soliciting sales – Advertising through media in-state – Operating in home-rule cities like Denver or Aurora
Illinois	Physical presence extends to any agent or representative, (including remote employees), operating within Illinois, regardless of whether they are permanent or temporary.	– Sales reps or field staff – Temporary work trips – Inventory storage – Contracts with in-state solicitors
New Jersey	During the pandemic, some states—like New Jersey—temporarily waived nexus standards for out-of-state sellers with local employees. After October 1, 2021, this relief ended. Today, a New Jersey-based remote employee creates physical nexus.	– Selling, leasing, or renting taxable goods – Maintaining any place of business – Employees or contractors working in NJ
North Carolina	A single employee working for an out-of-state business from within NC creates physical nexus.	– Maintaining an office or other place of business – Inventory in NC – Selling or distributing from company vehicles
Pennsylvania	Businesses have nexus when engaging in activity through an agent, including a “telework” employee.	– Having an office or place of business – Storing or distributing goods – Leasing property in PA
Texas	Having employees or representatives in the state of Texas is indicative of “doing business”, which creates nexus.	– Temporary or permanent locations in TX – Employees selling or taking orders – Services performed in-state – Selling at festivals, markets, or pop-ups
Washington	One in-state employee is sufficient to establish physical nexus.	– Real property or inventory in WA – Renting or leasing tangible personal property – Soliciting sales – Construction, installations, or repair of property

The bottom line: If you have any employee performing business functions inside a state—even temporarily—you should assume physical nexus exists until proven otherwise.

Nomad Workers: A Nexus Wildcard

A little bit trickier is the subject of traveling workers or salespeople. Traveling employees includes sales reps, consultants, field technicians, and “digital nomads” that frequently cross state boarders to perform business functions.

The key question most businesses ask:

Does one trip into a state trigger nexus, or does the activity need to be repeated?

What most states consider

While some states provide direct guidance, others rely on general principles of physical presence:

• Regular or recurring presence by a salesperson typically establishes nexus.
• Routine in-person canvassing, product demos, or follow-ups can qualify as regular.
• One-off visits typically do not trigger nexus, depending on state-specific rules and the nature of the work.
• Activities tied to revenue generation (soliciting sales) are almost always high-risk for nexus exposure.

Because interpretations vary and guidance is inconsistent, businesses with nomadic employees should evaluate risk state-by-state, especially in areas where sales activity occurs multiple times per year.

How Businesses Can Reduce Remote-Worker Nexus Risk

As remote employment becomes more common, businesses need clear internal processes. Below are recommended steps to prevent unexpected nexus exposure.

Map your employee footprint

Track where employees live, where they travel, and what activities they perform.
Categorize activities by risk

Some activities, like soliciting sales or handling inventory, are high risk for nexus triggers. Other business activities like customer service calls or online sales (which would be a consideration for economic nexus rather than physical nexus) aren’t lower risk.

Use this categorization to prioritize where compliance is needed first.

Check state requirements regularly

States update their guidance on nexus standard frequently, so remaining sharp is key to staying compliant.

💡Did You Know? SalesTaxSolutions.US can assist with nexus evaluations and state-by-state exposure reviews.

Update employee policies

Include:

• Rules around working outside an employee’s home state
• Required documentation for business travel
• Pre-approval for out-of-state client visits
• Expectations around tracking time spent in each location

Use voluntary disclosure programs if needed

If you discover past obligations your weren’t aware of, applying for a Voluntary Disclosure Agreement (VDA) can help minimize penalties and limit the lookback period.

What To Do if You Discover You Have Nexus

If your evaluation reveals physical nexus in a new state:

• Register immediately for a state sales tax permit.
• Assess previous periods and determine whether a VDA is needed.
• Separate marketplace vs. direct sales, as marketplace facilitators are responsible for sales tax collection on sales made through their platforms.
• Monitor and document ongoing exposure.
• Consult a sales tax solutions specialist for multistate nexus analysis, registrations, and ongoing filing support.