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Knowing where to collect and remit sales tax for your business becomes more complicated all the time, thanks to the sometimes ugly world of sales tax nexus. If you have nexus in a state, you are responsible for collecting sales tax there.  Here are four business activities that can trigger nexus that are somewhat under the radar:

Storing Products in Out-of-State Warehouses

If you are an e-commerce seller with products stored in warehouses in different areas of the country (in order to facilitate fast shipping), there's a good chance you have nexus in those states. This can be especially tricky if you are an Amazon FBA seller, since you may not even know where your products are being warehoused without doing quite a bit of digging.

Sending Sales Reps to a State

Another common business activity that can trigger nexus is sending sales reps to other states in order to market your products or services. Just the act of selling in another state is usually enough to establish nexus there, making you liable for collecting and remitting sales tax.

Traveling to Trade Shows

Trade shows can be a great way to drum up interest in your product, but in some states this is also an activity that creates sales tax nexus. Depending on how the sales tax code is written in a specific state, this may depend on how many days per year your business participates in trade shows or similar events.

Using Resources in Another State

If your business relies on the infrastructure within another state to deliver your service, even without having an established physical presence there, you may very well have nexus. For example, if you operate a telecom business with customers in multiple states, you will have nexus in those states because you are using the telecom infrastructure and network based in the state - specifically the switches, towers, etc.  This may seem unusual since the business may not own this equipment, but the states consider this equipment critical in delivering the service and attach nexus to the business.

As you can see, the area of sales tax nexus is not always clear or easy to determine. If you need the guidance of a sales tax expert to help you determine your sales tax nexus responsibilities, give us a call today.

Sales Tax Nexus Debate

Brian Greer

Written by Brian Greer