How Amazon’s state tax issues sheds light on possible tax issues for your company

  • July 5, 2011
  • Steve Wisinski, CPA, MAFF

I heard a good segment on NPR’s “Morning Edition” this morning about how the State of California’s sales tax laws are creating tax collecting issues for online retailers.  This touches on the growing issue of “nexus” for state taxing authorities.   The term “nexus” refers to a company/individual which has a “presence” in that state and is subject to tax system. If an entity has a presence in a state (“nexus”) then they may be subject to the tax rules of that state.  These rules apply to all of a state’s taxes: sales, personal, business, etc.  If you are dealing with 50 states and multiple tax types in each state, you can see how this quickly becomes a complex issue.

The reach of our clients is becoming more national, selling products and services in multiple states.  These issues have become more prevelant and will continue to as the world grows smaller in this digital age.

We will follow up in the near future with a more in depth post regarding nexus, in the meantime listen to the NPR segment here and contact us if you have any questions/concerns about how state nexus affects you.