Lookback Period
The lookback period refers to the timeframe a tax authority examines to determine whether a business has exceeded economic nexus thresholds in a given state. It is used to assess whether a business has met the sales or transaction volume requirements that trigger an obligation to collect and remit sales tax.
Each state sets its own lookback period, which typically ranges from the previous calendar year to the current or previous 12-month rolling period. Some states may use different measurement windows, so businesses must regularly monitor their sales data to stay compliant.
- A state may define economic nexus as $100,000 in sales or 200 transactions in the previous or current calendar year.
- If a business exceeds this threshold within the lookback period, it is required to register, collect, and remit sales tax in that state.