Economic and Sales Tax Nexus

In determining whether a business has sales tax nexus in a particular state, historically, I would have said if a company has income tax nexus in a state then they will also have sales tax nexus in that same state.

This statement is based on the premise that whatever activities in a particular state create income tax nexus, those same activities will create sales tax nexus.

The inverse is not true however.

For example, a business can merely solicit sales which is likely to create sales tax nexus (depending on the frequency and duration) but this activity by itself does not create income tax nexus. I’m starting to change my opinion on this subject though.

Lately, I have fielded more and more questions related to economic nexus. Generally, economic nexus is an income tax issue but Washington State imposes an economic nexus standard on sales and use tax. Which is confusing because I don’t see how this is supported by existing case law and the physical presence standard that is used for determining sales tax nexus. Does anyone know of any challenges to the Washington economic nexus standard and the requirement to report sales tax?

I’m now of the opinion that it’s possible to have income tax nexus (due to economic nexus) without having sales tax nexus since there may be no physical presence in the state. How long will this last?

If Federal legislation including the Marketplace Fairness Act of 2015 and the Remote Transactions Parity Act fail to make progress, I wouldn’t be surprised to see more states start to assert sales tax nexus based on economic parameters solely. What do you think?