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Sunday, February 28, 2016

Trailing Nexus - Extra Complexity

As if it isn't already difficult enough for a business to know if it has income or sales tax nexus in a state, it might have "trailing nexus."  Of course, if the business has a physical presence, it likely has nexus. It is challenging when a state uses economic nexus or for sales tax, the business has some type of relationship with someone in a state. When a state specifies that a company has nexus for an extra six months (or other time period), that does provide certainty, but is it constitutional? And most states don't talk about it so you really don't know when nexus ends.

I think states can do better although perhaps Congress needs to step in on this one for uniformity.

I've got more on this SalesTaxSupport blog post - please take a look.

What do you think?

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