Nexus for state corporate income and sales and use taxes remains widely variable between states, according to the Bloomberg BNA 2013 Survey of State Tax Departments.
Nexus, for state tax purposes, means the threshold of contact that must exist between a taxpayer and a state before the state has jurisdiction to tax the taxpayers.
Every state participated in this year’s survey, which included the nexus consequences of Internet servers, alternative work arrangements, and transactions involving non-U.S. entities. The sales tax policy portion of the survey asked about sourcing rules, the treatment of social media coupons, and the extent to which each state conforms to the Streamlined Sales and Use Tax Agreement as of Jan. 1, 2013.
Among its findings, the survey found that reimbursing sales staff for the costs of maintaining an in-home office would trigger income tax nexus in 25 states. Soliciting services for six or fewer days would trigger nexus in every state but Hawaii, Massachusetts, Oklahoma, Rhode Island, Vermont and Virginia.
Attending a trade show for 14 or fewer days is enough to trigger nexus in nine states, although California, New York City, and Texas each said they had a special exclusion for trade show participants. Conducting job fairs, hiring events or other recruitment activities would trigger nexus in 20 states.
Twenty-nine states said sales tax nexus would result for a corporation that makes remote sales into the state, and stores and ships items from an in-state distribution center. States reaching the opposite conclusions were Indiana, Maine, Nevada, Vermont and West Virginia. Eighteen states—one less than last year—said a remote vendor that enters into affiliate agreements with one or more residents in the state would trigger nexus if sales attributable to all such arrangements totaled $10,000 or more.
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