What's in This Issue - Summer 2017
Most CFOs and tax directors are familiar with the concept of nexus in the context of state tax. However, according to EisnerAmper SALT Partner-in-Charge, Gary Bingel, many people remain confused by the somewhat conflicting jurisprudence surrounding the topic and are often surprised by how easily states can assert a nexus claim against a business based on seemingly minor, or even inadvertent, activity by the business.
In this issue of Business Tax Quarterly, we take a high-level look at three key areas greatly impacting businesses that have multistate operations.
First, we examine the current state of the law on nexus and point out some of the traps for the unwary that businesses should anticipate – particularly in the fast-paced, increasingly electronic-based business world.
Second, we review the potential shape of things to come in the nexus arena. This includes the states’ increasing use of bright-line or economic nexus thresholds that are aimed at businesses having a relatively low threshold of sales in the state, including businesses that have no demonstrable physical presence, such as property or employees. This is a trend that seems likely to continue at the state level.
Third, we analyze proposed legislation at the federal level that seeks to codify a physical presence standard for purposes of state tax nexus. The bills introduced in Congress have been criticized by states as imposing unfair restrictions on their ability to expand their tax bases through the use of concepts such as economic and click-through nexus.
Businesses need to monitor the progress of these bills as well as the status of the nexus fight at the state level, both in state legislatures and in the courts.
Business Tax Quarterly - Summer 2017