Despite the constitutional, judicial and legislative pronouncements affecting nexus, states vary widely on what level of activity renders a business liable to pay state tax.“There are plenty of gray areas, and on some issues a state will say it depends on the facts and circumstances,” said George Farrah, executive editor of state tax and accounting for BNA.

Although the 1992 Supreme Court decision in Quill concerns sales tax nexus on out-of-state corporations, the High Court left undecided the issue of whether income tax nexus is subject to the same test.

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