Though we acknowledge that issues surrounding worker classification and those associated with unclaimed property are still among the most important facing you this compliance season - take note: a challenger has emerged.

Over the past couple of years an increasing trend has not only emerged, but is accelerating (with four states having passed new laws on the topic at hand just in the last year). What is this topic you might ask? It's actually quite simple. To date nearly a fifth of all states have signed into law legislation seeking to improve sales and use tax compliance via increasingly broadening how they define "nexus". What these states are doing is targeting sales made to in-state customers by out-of-state retailers. Most of these laws focus on businesses that have activities generating revenue in a particular state - with a key element in determining whether or not "activities" are going on in-state being whether or not a place of business is maintained. 

As we frequently inform our subscribers nexus, and within that, the meaning of "place of business" stand among they keys to understanding where the states are going. Typically "place of business" definitions take the form of a multi-part tests (with each state having a different test). Without going into the details of these tests, and thus turning this blog post into a treatise on State level tax compliance, one of the more important determinations is one of "substantial nexus" or "substantial presence".

What we are finding is that the slew of new laws taking effect this year have broadened this definition of "nexus" or "substantial nexus" to include those out of state businesses who may not even have employees or indepedent contractors with a "business connection" to the state, but go much, much further - to even include "third parties". For more on how you can handle this very real and growing area of State level focus see our upcoming 2012 Compliance Guide, or subscribe today and our tax experts can answer your questions within two business days or less of being submitted.