In short
Nexus is the connection between a business and a state that is enough for the state to impose a tax on it, or to require it to collect sales tax.
Key takeaways
- Since the Supreme Court's 2018 decision in South Dakota v. Wayfair, economic presence (such as sales into the state above a threshold) can create sales tax nexus.
- Public Law 86-272 protects sellers of tangible goods whose only in-state activity is soliciting orders from state net income tax.
- Once nexus exists, income is divided among states by apportionment.
Where it's tested
TCP: Multi-Jurisdictional & International Basics — study notes, a five-minute revision sheet and practice questions.
Practise: 3 questions
Question 1 of 3 · 0 answered
A company's only activity in a state is sending sales representatives to solicit orders for tangible goods, which are approved and shipped from outside the state. What protection does Public Law 86-272 provide?