Posted on December 11 2017

Nexus — Not So Simple Anymore

by John Hannis —

My father liked ice cream. When I was a boy, he would wait in the car while sending me into the IGA to get his ice cream, usually mint chocolate chip. In those days, when we wanted to buy something, we went to the store. For just about everything. Shopping was simple.

For businesses, nexus was also simple. Whether a business had a retail store, a wholesale distribution center, or a warehouse, nexus was based on a business’ physical location or “bricks & mortar”. Income tax returns and sales tax returns were filed based on the states and localities where a business had a physical presence.

Now, with the advent of technologies that allow us to view and buy products with our computers and phones, shopping options and nexus standards are evolving. States are now using factor presence, or economic nexus standards in addition to the traditional physical presence standards to require businesses to file returns. These standards vary by state, and are somewhat arbitrary in design.

At MillerSearles, we help our clients review and apply the pertinent nexus standards for compliance with state and local filing requirements:

  1. Economic nexus is the presence of factors (sales, payroll, and property) that trigger a filing requirement when one or more of the respective factors exceed monetary thresholds established by state.
  2. Sales and use tax nexus is generally established when a business has a non-trivial physical presence in a state according to a series of ‘facts and circumstances’ tests.
  3. Income tax nexus is determined by state for business activities that are not protected by a court ruling known as Public Law 86-272.

I like ice cream, too (it’s hereditary).

And I also have Amazon Fresh deliver groceries to my door.

Let nexus begin.