In today's business environment, companies are looking to expand and grow into new markets, and the information age is providing the opportunity to deliver products and services to multiple states and countries, quickly and cost effectively. But with market expansion comes tax ramifications that business owners may not be factoring into their plans.
Nexus is a connection or link associating two or more people or things. Businesses and sales, businesses and employees, businesses and contractors, individuals and investments: any of these could be a nexus creating relationship. State tax jurisdictions are working hard to identify these relationships, thereby tying your business to that state. The result could be increased tax filing and payment responsibilities for you and your business.
Some of the common activities that can cause nexus with another taxing jurisdiction (besides your home state) include:
Physical presence in a state (ie. office, warehouse or retail location);
Deriving income from sources within a state;
Owning or leasing property in the state;
Employing personnel within a state who engage in activities that go beyond those protected under federal interstate commerce laws;
Delivering products to customers in Company owned vehicles;
Advertising in local media;
Sending employees into the state to attend trade shows or conduct training seminars;
Actively soliciting orders for sales of tangible personal property through employees or agents;
Performing activities including solicitation of orders for services, real estate or intangibles;
Allowing unrelated third parties with an in-state physical presence to receive payments on the Company's behalf;
Selling products or services over the internet.