What is the Future of Nexus?

February 21, 2020

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


Transcript

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's 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.


More in This Series

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You need to understand the concept of Nexus if you are selling over the internet.

What Has Changed About Nexus and Wayfair?

When you sell over the internet you need to understand the concept of nexus. Because of sales across state lines sales tax must be collected.

How Has Nexus Been Applied Previously?

Presence through intangibles, agents, affiliates and really any sort of minimal connection that people may not think of as physical presence was nevertheless found to be sufficient to establish physical presence for purposes of Nexus and the sales tax and income tax area.

How Should Companies Manage Wayfair Changes?

A discussion on how companies should manage Wayfair changes including understanding their Nexus footprint, sales tax and your revenue streams and the taxability of them.

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Apportionment issues present challenges and opportunities. Proper planning can help to manage your overall tax liabilities, and knowledge of these issues can help mitigate potential exposures and combat aggressive taxing authorities on audit.

Apportionment Opportunities

In this Apportionment overview, Gary Bingel discusses challenges and opportunities and how planning can help manage overall tax liabilities, and knowledge can help mitigate potential exposures and combat aggressive taxing authorities on audit.

What is Apportionment?

Apportionment is the manner in which income is divided between various taxing jurisdictions. A number of states have moved to receipts receiving more emphasis. Our video overview sets the stage for our pitfalls, risks and opportunities discussions.

What is Nexus?

In this Nexus overview, Gary Bingel discusses how Nexus varies state by state, the contacts required to generate taxes, "physical presence" and other key focus areas including remote employees, and new sourcing rules among others.