What is the Future of Nexus?

February 21, 2020

Knowing your Nexus tax exposure can save you a lot of time, grief and money.


Gary Bingel: Where Nexus is headed, for most companies and in general, is that companies are going to face, as I said previously, increased costs and they're going to have more audits and more issues to deal with that they may not be used to. Whereas previously, they may have only had to file in two or three states, now they're going to be filing potentially across the country. For many companies, this could be a monumental shift in how they do business and how they charge their customers. Things such as where they keep inventory may become more important now. They may have increased registrations as well as increased filings. These increased filings may also result in needing more personnel or just finding other ways to cope with all this additional work. It's also important to remember that states have gotten much better at cross matching their various taxes with one another.

Once you start filing for sales tax, if you're not falling for other taxes such as income taxes, it may raise a red flag with the state. Accordingly, you need to consider not just your sales tax footprint, but where you're filing things such as income taxes and franchise taxes as well. You're going to have an increased exposure from having increased sales tax Nexus. It's also important to keep in mind that as your Nexus exposure increases for sales tax, it may increase for things like income tax. Right now, those thresholds are set at $100,000 and 200 transactions. One question is, how long until states become more aggressive again and start to lower those thresholds?

About Gary Bingel

Gary Bingel, Partner-in-Charge of the National State and Local Tax Group, with expertise focuses on state and local income taxation, and sales and use tax consulting. He has significant experience serving clients in the manufacturing, retail, pharmaceutical, biotechnology, technology and service industries.

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