Certain activities, as insignificant as they may seem, may establish nexus (a connection with a state that subjects you to its tax laws). You unknowingly may have had nexus with a state for many years. You might even be responsible for back sales taxes, franchise taxes and income taxes, penalties and interest for past years.
As states continue to face budget challenges, nexus is a bigger issue now than in the past. States are becoming more aggressive in seeking revenue, and a popular source of this revenue is out-of-state companies.
New initiatives between states, such as the recent streamlined sales tax initiative, will greatly increase the amount of information sharing between states. This increased communication will likely result in an expanded emphasis on nexus discoveries by states.
The good news is there are steps you can take to reduce your exposure and liability if you take them before discovery by states. We can:
- Conduct a nexus study to look for estimated liability, if any, by tax type and state
- Anonymously contact selected states on your behalf to negotiate voluntary disclosure agreements
Complete our free, online questionnaire to help identify potential nexus liability. A BKD state and local tax professional will review your responses, without obligation, and contact you to discuss your business activities in other states.