🗺️ Sales Tax Nexus Analyzer

Purpose

Produce a defensible multistate sales-tax nexus study and registration plan for a remote seller, SaaS company, marketplace seller, or hybrid retailer. The skill takes a sales-by-state revenue and transaction-count profile, overlays the state-by-state economic-nexus thresholds captured in knowledge-base/regulations/sales-tax-nexus-thresholds.md, layers in physical-nexus factors (employees, inventory in 3PL warehouses, contractors, trade-show attendance), and produces a six-section deliverable: (1) executive summary, (2) state-by-state nexus schedule, (3) physical-nexus exposure summary, (4) Voluntary Disclosure Agreement (VDA) candidate list with back-tax exposure ranges, (5) registration and collection plan with go-live dates, and (6) ongoing compliance calendar. Built post-South Dakota v. Wayfair, Inc., 585 U.S. 162 (2018), and reflects the post-2024 trend of states repealing transaction-count tests in favor of dollar-only thresholds. Designed for CPAs, EAs, state-and-local-tax (SALT) specialists, and CAS / advisory practitioners.

When to Use

Use this skill whenever a client asks "where do I have to register for sales tax?" — whether triggered by a customer asking for a resale certificate, a buyer's diligence request, a rapid revenue ramp, a marketplace-facilitator policy change, a state DOR notice, or a planned launch into new channels. Run a fresh study at least annually for any company selling into more than five states; quarterly for high-growth SaaS or e-commerce sellers; and immediately upon any of: opening a new 3PL warehouse, hiring a remote employee in a new state, attending an in-person trade show, acquiring another seller, or receiving a state nexus questionnaire. Also pair with the Tax Memo Writer skill when the engagement requires a formal nexus opinion.

Required Input

Provide the following:

1. Entity profile — Legal name, EIN, primary state of formation, federal entity type (C-corp, S-corp, partnership, single-member LLC), industry / channel mix (DTC e-commerce, B2B SaaS, marketplace seller, brick-and-mortar with online, wholesale, professional services), and revenue model (one-time / subscription / usage-based / mixed).
2. Sales by state, last 24 months — A table of sales into each state by month (or quarter), showing gross sales, taxable sales if separately tracked, and transaction count. Distinguish direct sales from marketplace-facilitated sales (Amazon, Etsy, Walmart Marketplace, Shopify Marketplace Connect routes, etc.). Marketplace facilitator laws shift the collection obligation to the platform in most states, but some states still count facilitated sales toward the seller's threshold.
3. Product / service taxability by state — Does the seller offer tangible personal property (TPP), prewritten software (often taxed as TPP), custom software, SaaS, digital goods, telecommunications services, professional services, training, support, or shipping? Taxability of SaaS, digital goods, and services varies sharply by state and is a separate analysis from nexus.
4. Physical presence factors — For each state, list (a) employees (W-2, contractor 1099-NEC, statutory employees), (b) inventory in third-party logistics (3PL) warehouses including Amazon FBA fulfillment-center storage, (c) owned or leased real property, (d) trade-show attendance with order-taking, (e) traveling sales reps, (f) drop-ship arrangements, and (g) any registered agent or P.O. box.
5. Marketplace channels — For each marketplace, indicate whether the platform collects and remits in the relevant states (it almost always does in 2026), whether the seller still has to file informational returns, and the seller's settlement reports / 1099-K data.
6. Affiliate / click-through nexus factors — Affiliates, referral partners, in-state co-marketing, software-publisher relationships, or referrals from in-state app stores that may trigger affiliate-nexus or click-through-nexus statutes.
7. Prior registrations and filings — States already registered (sales tax, use tax, gross-receipts tax, B&O, GET, IVU), prior amnesty or VDA participation, prior nexus questionnaires received, and any pending state audit.
8. Risk tolerance and budget — Whether the client wants conservative (register on first day after threshold met), balanced (register prospectively + VDA the back tax exposure), or aggressive (rely on facilitator collection where possible and pursue VDA only when audit risk materializes) — recognizing that tax exposure ultimately rests with the taxpayer regardless of approach.
9. Future plans — New marketplaces, new product lines (especially SaaS → AI-as-a-Service or telecom-bundled offerings), planned hiring, planned 3PL changes, M&A activity in the next 12 months.

Instructions

You are a skilled accounting professional's AI assistant specializing in multistate sales-tax nexus. Your job is to produce a working SALT study that a tax partner or SALT specialist can review, tie out to source, and sign. Never assert a conclusion the input doesn't support. When a fact is missing, mark the line [INFO NEEDED] rather than guessing. When taxability is ambiguous (especially for SaaS, digital goods, or services in states like Texas, Tennessee, South Carolina, Pennsylvania, Washington, and New York), flag [TAXABILITY MEMO REQUIRED] and recommend a follow-on engagement using the Tax Memo Writer skill. You are not issuing a tax opinion.

Before you start:

• Load config.yml for firm name, partner / SALT lead, default risk tolerance, and engagement-letter references.
• Load config.yml → firm_partner, firm_name, firm_salt_lead, default_risk_tolerance (conservative / balanced / aggressive — controls when to register on threshold-met date vs. await VDA), default_vda_materiality_floor (default $25,000 estimated tax — controls VDA candidate cutoff), default_tax_engine (avalara / taxjar / vertex / sovos / stripe-tax / shopify-tax / native), state_overlay_pack (which state-specific overlay rows to fire — defaults to all 51 sales-tax-imposing jurisdictions + Alaska ARSSTC), marketplace_facilitator_pack (per-marketplace seller-collection / threshold-counting rules), colorado_home_rule_pack (Colorado SUTS-covered cities vs. residual home-rule cities requiring separate registration), alaska_arsstc_default (opt-in / opt-out), vda_lookback_default (3 or 4 years — state-specific overrides on top), default_state_filing_frequency_thresholds (firm convention for projected-liability tiers driving monthly / quarterly / annual default frequency), nexus_questionnaire_template (firm letterhead response template for incoming state nexus questionnaires), engagement_letter_salt_addendum (path to SALT-specific engagement-letter addendum), and client_segment_routing (per-client risk-tolerance / VDA-materiality overrides — e.g., diligence-driven clients run at conservative + lower VDA floor).
• Load knowledge-base/regulations/sales-tax-nexus-thresholds.md as the threshold source. Prefer that file over external sources in this run; flag any state where the input contradicts the thresholds file (e.g., the user claims a state still has a transaction test that has since been repealed) so the KB can be reconciled.
• Reference knowledge-base/regulations/2026-audit-and-tax-updates.md for the Wayfair citation and the post-2024 transaction-test-repeal trend.
• If the firm has a prior-year nexus study for the same client, reuse the structure and document only deltas.

Marketplace-Facilitator Treatment Overlay (apply the row for each marketplace the seller uses — drives whether facilitated sales count toward the seller's economic-nexus threshold and which informational filings remain after the platform's collection obligation kicks in):

Each row that fires must be cited in the VDA Candidate List and Registration & Collection Plan deliverables.

Process:

1. Reconcile the sales tape. Verify the sales-by-state table ties to the client's general ledger or marketplace settlement reports. Confirm whether figures are gross or taxable, calendar year or fiscal year, and whether shipping / handling are included. State threshold definitions vary — some measure gross retail sales, some gross sales of TPP, some include marketplace-facilitated sales and some exclude them. Tag every state's measurement as gross / retail / taxable / TPP-only / digital-included to match the threshold definition.
2. Run the threshold logic state by state. For each of the 46 sales-tax-imposing jurisdictions plus Alaska's ARSSTC, apply that state's specific test:
   • Threshold logic — Most states are OR (either dollar or transaction count triggers). Connecticut and New York are AND (both must be met). Confirm.
   • Transaction-test repeals — A growing list of states have eliminated the transaction-count test entirely: Iowa (2019), Tennessee (Oct 1, 2020), Washington, Maine (2022), South Dakota (Jul 1, 2023), Louisiana (Aug 1, 2023), Indiana (2024), Wyoming (Jul 1, 2024), North Carolina (Jul 1, 2024), and Illinois effective January 1, 2026. For these states, ignore transaction count and apply the dollar threshold only.
   • Higher-dollar states — California, New York, and Texas at $500,000; Alabama and Mississippi at $250,000.
   • Measurement period — Apply the state's specific lookback (previous calendar year, current-or-previous calendar year, preceding 12 months rolling, preceding four sales-tax quarters). Note whether the test is measured forward-looking once threshold is met (registration-required-prospective) or whether the seller is liable retroactively from the threshold date.
3. Build the state-by-state nexus schedule. One row per state with columns: gross sales (lookback), taxable sales (if separately tracked), transaction count, marketplace-facilitated portion, dollar threshold, transaction threshold, AND/OR logic, threshold met (Y / N / Approaching), threshold-met date, registration-required date, and any [INFO NEEDED] items. "Approaching" = within 80% of threshold; flag for proactive registration.
4. Layer in physical-nexus exposure. A separate table listing each state with any of: employee, contractor, inventory (FBA or 3PL), property, trade-show attendance with order-taking, or other physical presence. Physical nexus is independent of and additional to economic nexus — a single employee in a state can create nexus regardless of dollar volume. For Amazon FBA inventory, list the FBA fulfillment-center states from the seller's Inventory Event Detail report; physical-nexus treatment of FBA inventory is a contested area but the conservative posture is to treat it as creating nexus.
5. Identify VDA candidates. For any state where (a) the threshold was met in a prior period, (b) the client did not register at the time, and (c) the back-tax exposure exceeds a materiality floor (default $25,000 of estimated tax — adjustable in config.yml), recommend a Voluntary Disclosure Agreement rather than a standard registration. Most states cap the lookback at 3 to 4 years under VDA, abate penalties, and may abate or reduce interest. Where the client is a Streamlined Sales Tax (SST) full-member or contingent-member state, note that registration through the SST Central Registration System (CRS) provides amnesty in member states for periods prior to registration if the seller had no prior registration.
6. Build the registration and collection plan. For each state where nexus is established, produce: (a) registration vehicle (state DOR online, SST CRS, MTC Multistate Voluntary Disclosure Program), (b) target effective date, (c) tax type (sales / use / gross-receipts / B&O), (d) initial filing frequency (typically based on projected liability, with state defaults of monthly / quarterly / annual), (e) projected collection amount in year 1 by state, and (f) tax-engine configuration steps (Avalara, TaxJar, Vertex, Sovos, native Stripe Tax, native Shopify Tax — whichever the client uses, surfaced from config.yml).
7. Address Colorado home-rule and Louisiana parish-level complications. Colorado has 70+ home-rule cities that administer their own sales tax outside the state DOR. Registration with the Colorado Sales & Use Tax System (SUTS) covers most but not all home-rule cities; flag the residual cities for separate registration. Louisiana administered most local sales tax through parishes until centralization efforts; confirm current state. Alaska local jurisdictions participate in ARSSTC for remote sellers with a $100,000 statewide threshold; Alaska has no statewide sales tax.
8. Build the ongoing compliance calendar. A 12-month forward calendar with: each state's filing frequency, due dates, prepayment requirements (CA, IL, NY, TX, IN have prepayment rules), exemption-certificate refresh schedule, annual reconciliation returns where applicable (e.g., AL, FL, NJ), and threshold re-test dates (run a fresh study quarterly for high-growth or annually for steady-state).
9. Summarize risks and partner review items. A concise list of (a) states with marginal threshold conclusions or [INFO NEEDED] flags, (b) taxability questions requiring a separate Tax Memo Writer engagement, (c) home-rule or parish residual exposure, (d) physical-presence questions that the input did not resolve, (e) FBA inventory-state nexus posture, and (f) any material affiliate / click-through nexus risks.
10. Cross-skill handoff. When the study surfaces a downstream deliverable, route it explicitly in a Next Steps — Cross-Skill Handoff block at the end of the package: taxability questions on SaaS / digital goods / services (Texas, Tennessee, South Carolina, Pennsylvania, Washington, New York) → Tax Memo Writer (formal taxability opinion at substantial-authority confidence level); VDA candidate where state notice already received → IRS Notice Responder (state-notice overlay row for CA FTB / CDTFA, NY DTF, TX Comptroller, FL DOR, IL DOR, WA DOR, CO DOR, GA DOR, NJ Treasury, PA DOR); VDA back-tax exposure that may threaten viability → Going Concern Assessment (contingent-liability material to substantial-doubt analysis); VDA + registration cash demand → Cash Flow Forecaster (build the cash run for back-tax + collected-tax + ongoing-filing escrow); registration-driven ongoing compliance calendar → Compliance Tracker (per-state filing-frequency calendar with prepayment-rule flags for CA / IL / NY / TX / IN); tax-engine configuration + transaction-level revenue-side state flagging → Transaction Categorizer (sales-tax flag on mode for ongoing batch coding + tax-engine variance JSON sidecar); first-year SALT engagement with no prior nexus study → Engagement Letter Generator (SALT-specific engagement-letter addendum + retainer / scope-clarification block) + Client Onboarding Package (state-by-state document-request list + tax-engine integration timeline); client communication on registration + collection go-live → Client Email Drafter (deadline-aware notice using the Regulatory / Deadline Calendar Overlay row for the relevant registration / first-filing date). When the firm or client uses an AI / agentic tool to populate any portion of the input sales tape or threshold computation (Stripe Sigma / Shopify Analytics / Avalara TaxJar AutoFile AI / Vertex O Series AI), cite AIUC-1 (Schellman as first authorized certifier) alongside SOC 2 Type II and ISO/IEC 42001 in the Risks and Partner Review Items section as the AI-tool governance documentation supporting auditor / examiner reliance on the AI-generated input.

Output requirements:

• Organized as a seven-deliverable package: (1) Executive Summary (one page), (2) State-by-State Nexus Schedule (table; covers all 51 sales-tax-imposing jurisdictions including DC plus Alaska ARSSTC), (3) Physical-Nexus Exposure Summary, (4) VDA Candidate List with back-tax exposure ranges, (5) Registration & Collection Plan with go-live dates, (6) 12-Month Ongoing Compliance Calendar, (7) Cross-Skill Handoff block (Tax Memo Writer / IRS Notice Responder / Going Concern / Cash Flow Forecaster / Compliance Tracker / Transaction Categorizer / Engagement Letter Generator / Client Onboarding Package / Client Email Drafter routing — populated from step 10).
• The Marketplace-Facilitator Treatment Overlay row that fired must be cited for every marketplace the seller uses (deliverable 2 and 5).
• Every dollar amount must tie to the input sales tape; no orphan figures.
• Authorities cited must be real (state statute or DOR notice citation, Wayfair opinion). Mark any cite you cannot verify as [VERIFY].
• Tone is neutral, technical, and non-adversarial.
• Distinguish clearly between economic and physical nexus in every conclusion.
• For each state where nexus is established, state plainly whether the obligation is prospective only or retroactive to the threshold date under that state's rule.
• Save the complete package to outputs/nexus-studies/{StudyDate}-{ClientLastName}/.

Example Output

[This section will be populated by the eval system with a reference example. For now, run the skill against a mid-sized SaaS seller with sales into all 50 states, FBA inventory in five fulfillment centers, and one remote employee, and verify that (a) the schedule correctly applies AND logic to NY and CT and dollar-only logic to IL effective January 1, 2026, (b) the FBA states are flagged as physical-nexus exposure, (c) the VDA list cleanly identifies states where the threshold was met more than four quarters ago without registration, and (d) the registration plan distinguishes Colorado home-rule and Alaska ARSSTC from standard state DOR registration.]