Service Solutions

Are You a Candidate for Nexus? These Companies Were!

Using Sales People & Independent Reps to Sell Product

A manufacturer in the Midwest used both company sales people and independent representatives to sell its product to retailers and end users. A western state determined this manufacturer's activities in its state created sales tax nexus. This state refused to accept “after the fact” exemption certificates for sales tax purposes. The manufacturer was assessed sales tax, penalty and interest for a 10-year period.

Shipping Products on Consignment to Customers

A manufacturer shipped its product on consignment to its largest customers’ locations in multiple states. A state determined that this activity in their state created income tax and sales tax nexus. The manufacturer was assessed tax, penalty and interest for a five-year period. This information was shared by the assessing state with other states that also assessed the manufacturer.

Delivering Products with Own Truck

A distributor of modular office cubicles and furniture shipped its product to customers in surrounding states, usually via common carrier and occasionally by its own trucks. One of the adjacent states determined the delivery by its own truck created nexus. The distributor was assessed sales tax, penalty and interest for a 10-year period.

Selling to Customers in Several States

A manufacturer of specialized equipment sold product to customers in several states. These equipment sales generally included a factory representative who would install and help set up the equipment. An audit conducted on the out-of-state customer led to an audit of the manufacturer. The audit determined the manufacturer had sales tax and income tax nexus with its state. The audit resulted in tax assessment, penalty and interest. This state shared the audit information with several other states that also conducted assessment-producing audits.

For More Information

Contact your BKD advisor or: