NEXUS: Do You Have Exposure?

We are bringing this issue to your attention and would like to address this area of concern with you as this will become a highly audited area in the next two years.

We realize that some companies have already identified this concern, taken action, and implemented solutions. Other companies still have exposure that has not yet been addressed.

State revenue departments are becoming more aggressive at targeting businesses by sending fact-finding questionnaires hoping to connect your company to their state. With the recent South Dakota v. Wayfair Supreme Court decision, we anticipate states to send these questionnaires more frequently. Porte Brown is dedicated to addressing this concern as it becomes a more prevalent method of inquiry utilized by state tax agencies.

Currently, 42 states have adopted the Wayfair decision and are looking for companies that sell to customers within their state. The general rule is 200 or more transactions or $100,000 of sales in any one state could cause a company to be liable for sales tax or income tax within that state. ALL businesses need to consider where their sales transactions are occurring.

A number of states currently offer voluntary disclosure agreements, an arrangement initiated by a company to retroactively comply with the state taxation laws in exchange for a more favorable look back period, but if the state contacts a business first, the voluntary disclosure window closes. Some states that have been more aggressive in assessing nexus on out of state companies include California, Iowa, Minnesota, Ohio, New Jersey, New York, Texas, and Wisconsin.

If you think you may have some nexus exposure, please contact nexus@portebrown.com or call 847-956-1040 to talk to our State and Local and Multi State Tax team.