Doing business in multiple states can substantially complicate a business’ tax compliance. In addition, localities within some states have different income tax, sales/use tax, license tax, etc.
Businesses operating in a multi-state environment are subject to a state’s taxing jurisdiction if they have “nexus” in that state. “Nexus” is a connection between a state and a business necessary to establish a state’s right to tax that business.
It is extremely important for businesses to monitor their activities and be aware of state nexus rules in order to determine potential tax liabilities and filing requirements. Being proactive with this can assist in tax planning and help reduce unwanted surprises, such as inquiries and audit assessments from states. The infographic highlights nexus key factors.
Read more of Keiter's state and local tax insights.