PART 1: What Is Nexus? The Constitutional Foundation
This is Part 1 of a 6-part series by The John Ellis Company, An Accountancy Corporation — On the evolution of NEXUS under the Commerce Clause and Due Process Clause.
Sales tax nexus is not created by the states—it originates from the U.S. Constitution. Nexus is the constitutional minimum connection required before a state can impose tax obligations.
Two constitutional provisions govern this:
- Due Process Clause → requires a minimum connection and fairness
- Commerce Clause → limits undue burdens on interstate commerce
This distinction matters. A business can meet Due Process standards yet still fail the Commerce Clause if the burden on interstate commerce is too great.
At The John Ellis Company, An Accountancy Corporation, we regularly see businesses misunderstand nexus by focusing only on physical presence instead of the constitutional framework driving tax authority.
Why This Matters
As businesses expand through e-commerce, remote services, and multi-state operations, nexus is no longer intuitive. Exposure often develops long before businesses realize it.
Understanding where nexus exists is the first step in managing risk. Contact The John Ellis Company, An Accountancy Corporation for a structured nexus analysis aligned with constitutional standards.