Nexus is a state and local tax concept. Nexus is defined as the "minimum connection necessary for a state to tax a taxpayer." Generally, there are three facto

Nexus is a state and local tax concept. Nexus is defined as the "minimum connection necessary for a state to tax a taxpayer." Generally, there are three factors that lead to nexus (there are more but i'll give you the basics.) If you have employees in a state then you have nexus (this may include contractors as well). If you have ANY type of property or rental in the state then you have nexus. If you have significant economic connection to a state then you have nexus (notice this is a very subjective and BROAD concept.) Having servers in a foreign country isnt really important because YOU the owner = nexus to the state that you're living in. So, your state has the right to tax you. The IRS doesn't care about your nexus because they dont have that rule. The IRS is the shit because they dont deal with silly questions of "the relation to income earned and the US." Their rule is simple, "All income you earn is taxable period unless we say it isn't"