Tag Archives: electronically delivered products

ANOTHER MOVE TOWARD ECONOMIC NEXUS

How is Indiana changing the way it views nexus?

Multistate tax can be a cumbersome issue. When businesses sell their products across state lines, they need to think about whether they have taxable presence, or nexus, in the state and if their products are taxable.

Generally companies establish nexus by having a physical presence in the state. However, several states are pushing the boundaries of defining the physical presence in order to generate more revenue. Welcome to the concept of “economic nexus.”

 

Nexus and Physical Presence

As we discuss in a previous post, “nexus” is the term used to describe the minimum connection that a company (taxpayer) must have with the state in order for the state to be able to subject the company to its state taxing schemes (including sales tax, income tax, gross receipts tax and others). Nexus is normally established by companies having a physical presence in the state, by virtue of having employees, or third party contractors acting on their behalf in a state, or the presence of a warehouse or storefront in the state.  Inventory in a state can also create nexus. Continue reading