What is Nexus?

February 21, 2020

Nexus varies state by state but, generally speaking, the contacts required to generate taxes can be fairly minimal. Furthermore, the term "physical presence" is often misunderstood and can lead to unwanted surprises, including penalties. Other key focus areas include remote employees, and new sourcing rules among others.

Transcript

Gary Bingel:

So nexus is really just a fancy word for when you have enough of a connection with the state that they can impose either a tax or some sort of tax collection responsibility on you as a company. There really are different criteria for nexus and historically, there were thought to be different criteria for sales tax nexus versus income tax nexus. And those things were applied differently. In the income tax area, things such as economic nexus have been around for quite a while versus in sales tax, it was thought that there needed to be some sort of physical presence. 

For sales tax purposes, the physical presence requirement came about from a early 1990s Supreme Court case known as the Quill decision. And in that decision, they found that in order to be subjected to a state sales tax collection requirements, you had to have some sort of physical presence in that state. Now, that term physical presence has been greatly misinterpreted over the years as states became very aggressive in applying that and interpreting what that meant.

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 Videos in This Series

How Does Wayfair Impact Companies?

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.
What is the Future of Nexus?

Save you a lot of time, grief and money by knowing your Nexus tax exposure. 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.
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.

Risks of Apportionment

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.