Although the continuing thirst of states for more dollars to fuel spending increases has led to a variety of efforts to augment tax revenue, they differ widely on what they consider sufficient contact with a business to give them the authority to tax it."Nexus" is the minimum amount of contact between a taxpayer and the state that would permit taxation by the state. It arises from the Constitution's due process clause, which requires a minimum connection between a state and an entity that it seeks to tax, and the Commerce Clause, which prohibits states from unduly burdening interstate commerce.

In addition, Public Law 86-272 further limits the states' power to impose income tax by prohibiting taxing businesses whose only activity in the state is the solicitation of orders, so long as the orders are accepted at and delivered from a point outside the state. To complicate matters even further, the law only applies to nexus for purposes of imposing income tax, but does not apply to sales tax nexus.

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