Nexus Strategies


A good state nexus strategy will do three things:

  • Lower cost of past state nexus mistakes,
  • Accurately calculate, collect and pay sales tax where sales tax nexus occurs, calculate and pay state income tax and ‘not income’ tax as applicable, and
  • Take advantage of different tax rates to leverage state nexus to your advantage.

In short, a Nexus Negotiator can help you:

Get out of trouble!

Stay out of trouble!

Use every advantage you can to turn a problem into an opportunity!

Contact us to learn how you can work with one of our specially trained Nexus Negotiators.

Nexus Problem #1:

JoAnn, a small business owner discovers that her business that ships products to other states actually has nexus in some of those states. She has never registered, collected or paid sales tax on the products.

Becomes…..

Nexus Negotiator Solution:

JoAnn clearly has sales tax nexus in previous years and owes past sales tax, penalties and interest. Her first impulse was to get registered right away and start collecting sales tax on her sales This would have cost her BIG TIME!

Instead, her Nexus Negotiator advisor negotiated a VDA (Voluntary Disclosure Agreement) that allowed her to first get an agreement anonymously which let her settle for pennies on the dollar.

LESSON: A VDA is only effective if it is first negotiated anonymously.

Nexus Problem #2:
Marco has a high volume, low margin business. He lives in Texas, but his business is actually throughout the US. He is an affiliate for some companies, actually has products drop shipped from others and he also vacations every year for an extended time in each year at his daughter’s house in California. He doesn’t know where he has nexus.

Becomes….

Nexus Opportunity!

Texas has a ‘not income tax’ called Margin Tax. It’s assessed on the gross of the company with a limited menu of deduction calculations. It’s basically a tax on a percentage of the gross of the company, with no allowance for the actual way the business operates or the income it has. It’s especially disastrous for low margin businesses like Marco’s. That’s when he discovered he actually had California nexus as well. California income tax rate is high, but it’s assessed on the net income of the company. In Marco’s case that meant that the CA tax was actually much lower than the TX tax.

Because he spent part of the year in CA and part of it in TX, he was able to allocate income and expenses using nexus to the jurisdictions that helped him reduce his taxes by 20%!

Nexus Problem #3:

Rob’s business was located primarily in his home state, but recently he discovered that he triggered nexus in 3 other states simply by adding sales employees in one state, exhibiting at trade shows in another state and holding personal property in another. After the initial shock that his business taxes just got way more complicated, he was shocked to find out that his overall state income tax bill just went from $110,000 to $80,000 per year.

Becomes….

Nexus Opportunity!

Rob’s home state uses what is called a single tier apportionment formula. In other words, the apportionment is strictly based on sales. The other three states used the 3-tier system which apportion taxable income based on a formula of sales, payroll and property.

Rob’s Nexus Negotiator advisor first negotiated a VDA for the states to eliminate past due taxes. Then Rob started reporting using the new 3-tiered apportionment formula. He actually reduced the amount of taxes he paid simply by being careful with how expenses were incurred in the four states. He saved a total of $30,000! Not bad.

Contact us to learn how you can work with one of our specially trained Nexus Negotiators.

Nexus Help

Every single day, somewhere in the US, there is a nexus law change. And some of those changes will mean more taxes for you, if you don’t do something about it now.

LEARN MORE ABOUT NEXUS WITH THESE PRODUCTS:

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