nexus

We recently did a strategy involving someone who worked in more than one state. Typically most states have some kind of rule that allows you to make isolated work forays into that state without incurring a personal income tax obligation. But the rules are muddy, and constantly in flux, as states try to find income wherever they can.

There’s a bill floating around Washington that may hopefully clarify and standardize the procedure, assuming it can get enough support to move forward.

It used to be that a state line was a state line. But where taxes are concerned, state lines are getting more and more blurred.

In this new Online Workshop, I’m talking about nexus and state income tax. States are getting even more far-reaching in their attempt to rope your income into their coffers. Learn the basic rules of nexus and the questions an auditor would ask.

It used to be that a state line was a state line. But where taxes are concerned, state lines are getting more and more blurred.

In this new Online Workshop, I’m talking about nexus and state sales tax. States are hungry for money and are looking to raise money any way they can. As a result, nexus is getting ever more complicated. What are these states up to now?

There seems to have been a theme over at the First Class Lounge forum this past week. Watch out for aggressive states! States are going broke and they are going to only get more desperate for funding. And, at the same time, eCommerce is cutting a big hole in their sales tax revenue.

When it comes to sales tax, it’s all about location. If you’ve got a brick-and-mortar store, things are easy. Everyone pays, unless the customer can produce a valid wholesaler certificate that says they are exempt from paying sales tax, and you don’t have to collect it on their purchase. But things get trickier online. If your business sells things online, where is your sales tax nexus now?

Typically the same logic still applies. Where does the sale happen? If you’re shipping from your basement in Ann Arbor, then any sales to Michigan-based consumers will be subject to sales tax and you’ll be responsible for collecting it, and paying it to the State of Michigan. If you sell through your website but the merchandise is direct-shipped from elsewhere, only sales in the same state the shipper is located in are taxable. So if your goods are shipped from Ohio, you’re only responsible for collecting sales from Ohio-based purchasers and sending that money to the Ohio Tax Department.

The State of New York is trying to change that, by going toe to toe with Amazon.com.

As a business owner, how do you feel when you see a competitor making misleading or flat-out wrong representations about how your industry works?

In the field of business formations and maintenance, the idea of the “Nevada virtual office” as a tax-saving solution for people living outside of this state has been around for as long as I can remember. The problem is that claim is largely … untrue (I’m not allowed to use the first word that came to mind). Fortunately, one of the things I love about having my own business is that I get to stand up and shout the truth as long and loudly as possible!

I frequently get a question that starts with “I formed a Nevada LLC (or Corporation) so I don’t have to pay state income taxes and …” I don’t even listen to the rest of the question since I have to stop it right there. That’s because a NV business structure generally does NOT save you taxes, no matter what the promoter who sold you one tells you. The reason is something called “nexus.”