You Registered for a Rule That No Longer Exists

A $6M parts distributor I work with files sales tax returns in fourteen states. Nine of those registrations exist because the company crossed 200 transactions somewhere, not because it crossed a dollar threshold. In four of the nine, annual sales run under $30,000. One state receives a $412 return every single month.

Nobody decided on that. It accumulated.

The trigger is disappearing underneath you

Kentucky removed its 200-transaction nexus threshold on August 1 under HB 757, passed in April. Nexus there is now $100,000 in sales, full stop. A remote seller shipping 900 small orders into Kentucky against $38,000 of revenue has no obligation anymore.

Kentucky is the sixteenth state to drop the transaction count. California, Illinois, Colorado, Indiana, Iowa, Louisiana, Massachusetts, Washington and Wisconsin cleared it out earlier. Fifteen states still use it, along with D.C. and Puerto Rico, including Georgia, Michigan, Minnesota, New Jersey, Ohio and Virginia.

If you sell low-dollar items into a lot of places, that's genuine relief. Almost nobody claims it. Registrations get opened under deadline pressure by whoever is watching a nexus dashboard turn red, and nothing in the process ever turns one back off. A registration is an event. Filing is a subscription.

Price the subscription. Between provider per-return fees, the registered agent, and the twenty minutes a month somebody spends confirming a number that hasn't moved, a dormant state runs $900 to $2,000 a year. Nine of them is a real line item defending revenue that rounds to nothing.

Closing one is not the same as stopping

Here's where finance teams get hurt. Deregistration is a process with its own failure modes, and treating it as a cancellation is how a cleanup turns into a notice.

Trailing nexus is the first one. California keeps a remote seller registered for the calendar year it had economic nexus and the following calendar year. Cross the threshold once in 2025 and you're collecting through the end of 2026 regardless of what 2026 sales look like. Other states run shorter windows, some run none, and the variation is the point.

Second, the gap. A closure request takes weeks to process, and every return that comes due in the meantime is still due, at zero. Stop filing the day you file the request and you collect penalties on returns nobody owed tax on.

Third, closing a registration is a document you hand a revenue department that has been receiving small returns from you for four years. Some states route final returns to review. If your collection history has holes, that's the moment they surface.

Registering was a compliance decision. Unregistering is an exposure decision, and it deserves the second look the first one never got.

What to do this quarter

Pull your registration list and put two columns next to it: why the state was opened, and trailing twelve months of sales into it. Most teams cannot answer the first column, which is the finding.

Sort by that revenue number. Anything under a quarter of the current threshold with no physical presence and no inventory sitting in a warehouse is a candidate. Anything within striking distance stays, because re-registering after a clean exit costs more than the returns.

Then work the candidates one at a time, checking the trailing nexus rule and the last four years of collection before you send anything.

Sixteen states quietly let you off the hook. Your filing calendar never got the message.