If you sell across state lines, you need to know when your sales activity triggers a requirement to register and collect sales tax in a new state. Avalara's economic nexus reports track your committed transactions against state thresholds and show you where you are approaching or have exceeded registration requirements.
Quick answer
- Avalara monitors your committed transactions weekly and compares them to economic nexus thresholds for states where you are not yet registered.
- You can generate two reports: the Economic nexus summary (states approaching or exceeding thresholds) and the Economic nexus state document line export (transaction-level detail for a specific state or all states).
- Both reports are available under the Transaction Reports tab in the Reports section, within the Economic nexus category.
- The reports are estimates based on your AvaTax transaction data and current state threshold laws; they do not constitute tax or legal advice.
What the economic nexus reports track
Avalara's economic nexus reports help you identify when your sales activity meets or exceeds the revenue or transaction thresholds that trigger a sales tax registration requirement in a state. These thresholds vary by state and can include gross sales, taxable sales, transaction counts, or a combination of these factors.
AvaTax monitors your committed transactions weekly and evaluates them against the thresholds for states where you have not yet turned on nexus. When you reach 80% of a threshold or exceed 100%, an alert appears on your home page and Avalara sends an email notification.
The two economic nexus reports
| Report name | What it shows | Best for |
|---|---|---|
| Economic nexus summary | States where you are approaching or have exceeded thresholds, plus states where you already have nexus turned on | Quick overview of registration status across all states |
| Economic nexus state document line export | Transaction-level detail for a single state or all states, including document code, customer code, line amount, tax code, exempt reason, and evaluation period | Reviewing the specific transactions that count toward a state's threshold |
How to generate an economic nexus report
You generate both reports from the Reports section in AvaTax.
- From Avalara Home, go to Reports.
- Select the Transaction Reports tab.
- In the Select a report section, choose Economic nexus from the category list.
- Choose either Economic nexus summary or Economic nexus state document line export.
- Set your report details. For the state document line export, you can choose to run the report for an individual state or for all states.
- In the Select the approximate number of transactions for your report section, choose one of the following:
- Create and download report instantly if your report includes fewer than 10,000 transactions.
- Create and download report in the background if your report includes 10,000 or more transactions.
- If downloading instantly, select Preview, then Create report. Review the report, and if it looks correct, choose PDF or XLS and select Download report. You can also skip the preview and download the report directly by selecting the file format.
- If downloading in the background, select PDF or XLS, then Create report. AvaTax processes the request and notifies you by email or in-app when the report is ready. You can download it from the Downloads tab.
What data the reports include
The economic nexus reports are based on committed transactions recorded in AvaTax. Only transactions that have been committed count toward the threshold calculations. If you have sales that occur outside AvaTax, those transactions are not included unless you commit them in AvaTax.
When calculating sales totals, AvaTax sums all committed sales invoices and subtracts return credits. Some states require a calculation based on gross sales without subtracting credits, so you should confirm the method your state uses before relying on the report for a final determination.
For transaction counts, AvaTax includes tax-exempt sales in the calculation for states where you have indicated you must collect and pay taxes.
Avalara evaluates economic nexus thresholds only for states where you have not already added nexus in the Where you collect tax page. The map and reports do not appear for states where you are already registered. The economic nexus map is updated weekly, on Tuesdays. Avalara tracks thresholds at the state level only and does not track local thresholds such as those in California.
Important disclaimers and limitations
Avalara cannot verify the accuracy or completeness of the transaction data you provide to AvaTax. The economic nexus reports are based on the committed transactions you have recorded and current state threshold requirements.
There may also be other reasons to register in a state, such as a physical company location, the location of your employees, or inventory stored in a fulfillment center. The reports do not account for these factors.
The economic nexus reports are estimates for your informational purposes and are provided as-is. They do not constitute tax or legal advice. You should always consult a tax professional before registering in a new state.
How to use the reports in your compliance workflow
The economic nexus summary report is useful for a monthly or quarterly compliance review. You can generate it to see which states are close to thresholds and plan ahead for registration.
The state document line export is useful when you need to verify the details of your threshold calculation, prepare documentation for a tax advisor, or reconcile your AvaTax data with your accounting system.
If the summary report shows that you have exceeded a threshold in one or more states, you can use the Register or Register all option to begin the state registration process. After you register, update the Where you collect tax page so that AvaTax begins applying the correct tax rules to your transactions in that state.
AvaTax calculates sales totals by summing committed sales invoices and subtracting return credits. However, some states require gross sales without subtracting credits. Before relying on the report for registration decisions, confirm whether your state uses net or gross sales calculations.
How Galvix can help with nexus monitoring and registration
Galvix's compliance team monitors your economic nexus thresholds across all 50 states and handles the entire registration workflow when you cross into a new state. That includes the paperwork, portal credentials, e-filing accounts, and ongoing permit renewals. You stay informed through your dashboard, but the work is managed for you.
If nexus tracking and state registrations are taking time away from your core work, book a demo to see how Galvix’s team handles it.
FAQ
Can I use the economic nexus report to determine my registration date?
Yes, but the report is an estimate and should be reviewed with a tax professional. The report shows when you exceeded a threshold based on your AvaTax transactions, but it does not account for sales outside AvaTax or other nexus-creating activities such as physical presence.
Does the report include transactions from all my companies in AvaTax?
The report evaluates thresholds separately for each parent or child company in AvaTax. If multiple subsidiaries are mapped to the same Avalara company, their eligible sales transactions are aggregated before the threshold is evaluated.
What happens if I exceed a threshold in a state where I am not registered?
An alert appears on your home page and Avalara sends an email notification. You can use the Register option to begin the state registration process through Avalara Sales Tax Registration. After you register, update the Where you collect tax page.
How often should I run the economic nexus reports?
You should run the summary report at least quarterly, or monthly if you are expanding into new states or experiencing rapid sales growth. The map is updated weekly, so you do not need to generate a report more frequently.
Does the report track local economic nexus thresholds in California?
No. Avalara tracks economic nexus thresholds at the state level only. California has local jurisdictions with unique economic nexus requirements, but the report does not track or alert on those local thresholds.
