What is Nexus?

Nexus means connection to a state.

Nexus with a state means tax.

Here are some scary facts about nexus:

  • The state defines what it takes to create nexus. You could potentially have 50 different definitions.
  • You can create nexus by simply showing up at a tradeshow or hiring a virtual assistant.
  • 95% of all businesses – small, medium and large – have underestimated their nexus footprint. That means they owe tax to states they don’t even know about. Do you?
  • If you have state sales tax nexus, it’s up to you to collect and pay sales tax. If you don’t collect it, you still owe the tax.
  • Once you are subject to sales tax nexus in a state, you have to collect sales tax according to that state’s laws.
  • If you become subject to a ‘not income tax’ nexus in one state, there is often an attempt to draw your other businesses into that state as well.

Rhode Island shut down 1200 businesses that didn’t properly report their sales tax. One seminar speaker had to pay almost one million dollars in tax, interest and penalties for failure to report state tax nexus in the states in which he spoke.

And most important of all: States are broke. YOU and YOUR BUSINESS are their economic stimulus program.

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