# Step 4: Tax profile and nexus planner

Source: https://developer.avalara.com/ai-onboarding/ifb2119014271471/

# Step 4: Tax profile and nexus planner

Configure tax profiles and determine nexus requirements based on economic activity and physical presence.

This step configures tax profiles and determines where nexus must be declared based on economic activity and physical presence.

## When this step occurs

This step occurs after AvaTax companies are created and before transaction calculation begins for those companies.

## What the AI agent does

During this step, the AI agent guides the user through tax profile configuration and analyzes nexus requirements based on economic activity and physical presence.

1.  **Tax profile configuration**: The AI agent asks whether entities share the same tax profile or require separate profiles. The user selects one of the following options and tags entities accordingly:

    -   **Shared**

    -   **Standalone**

    -   **Mixed**

2.  **Economic nexus analysis**: The AI agent queries the economic nexus monitoring endpoint to analyze historical sales by jurisdiction. Based on this analysis, the AI agent:

    -   Identifies states and jurisdictions where sales approach or exceed economic nexus thresholds.

    -   Flags those jurisdictions for user review.

    Note

    Economic nexus recommendations are based on transaction analysis and may not constitute legal tax advice. Consult with your tax advisor to confirm nexus obligations.

3.  **Physical nexus via address resolution**: The AI agent reads all active ERP locations. For each location, the AI agent calls `[POST /api/v2/addresses/resolve](https://developer.avalara.com/api-reference/avatax/rest/v2/methods/Addresses/ResolveAddressPost/)` to extract jurisdiction codes, including state FIPS, county, city, and special districts.

    The AI agent builds a comprehensive nexus proposal by combining physical and economic jurisdictions.

4.  **Nexus health check (for mapped entities)**: If the user mapped existing companies in Step 2, the AI agent retrieves current nexus declarations and compares them against the proposed nexus. The AI agent displays a health status for each entity:

    -   Complete

    -   Gaps identified

    -   Excess nexus

    The user can add missing nexus declarations as needed.

5.  **Present proposed nexus**: The AI agent presents a table showing:

    -   Entity or company

    -   Jurisdiction

    -   Nexus type (physical, economic, or both)

    -   Effective date

    -   Source location

    The user reviews and confirms the proposed nexus configuration.

## Outcome of this step

After user confirmation, the system immediately implements nexus declarations using the following AvaTax APIs:

-   `[POST /api/v2/companies/{companyId}/nexus/byaddress](https://developer.avalara.com/api-reference/avatax/rest/v2/methods/Nexus/DeclareNexusByAddress/)`

-   `[POST /api/v2/companies/{companyId}/nexus](https://developer.avalara.com/api-reference/avatax/rest/v2/methods/Nexus/CreateNexus/)`