Nexus Trends: Legal Requirements

Staying on top of state and local tax laws can be difficult and time consuming. New court decisions, tax rulings and changes to laws are happening often, and the needs to reduce current tax bills and minimize future ones are top of mind, no matter your location. This blog post is the second in a four-part State and Local Tax series. The aim of this series is to provide resources to address some of these concerns.

Nexus is the determining factor of whether an out-of-state company is subject to a state’s income/franchise tax or sales and use tax. In other words, nexus is required before a taxing jurisdiction can impose a tax on a company.  

Nexus laws are changing as states try to keep up with today’s business environment. A company must know the risks as it expands its state footprint. Precise definitions of nexus have always varied from one state to another, but several factors make it a more complicated and crucial concern now. Online commerce blurs the relevance of physical presence standards. As states face pressing needs for more tax revenue to balance budgets, they are devising more expansive nexus provisions, thereby increasing the possibilities that a company may face tax obligations without being aware of that nexus.

For more detailed discussion regarding the legal requirements and nexus rulings, download Weaver’s Nexus Trend Concerns Insights document.