Multi-State Compliance

Subject to Taxes in Another State?

As tax revenues decrease, state revenue departments are becoming more aggressive in identifying out-of-state businesses that are not filing tax returns with their state. Not filing can lead to severe assessments of taxes, interest and penalties. We recommend that you review your business activities in other states to determine if you have filing requirements.

The easy question of “What determines if my company is conducting business in another state?” has a very difficult answer. Laws are confusing, and vary state to state. To further the confusion, filing obligations for sales tax can be different than income tax. Federal law prohibits states from taxing businesses whose only activity in the state is the solicitation of orders, as long as the orders are accepted and delivered from a point outside of that state.

But what if a company delivers into that state using company trucks? What if the company has a sales agent in that state working out of a home office? Is the sales agent an employee or independent contractor? Does the sales agent have a company computer? Does the company participate in trade shows? Does the company install or repair its product?

C&G can proactively assist you in determining your company’s tax nexus exposure. To start the process, ask for our questionnaire. Not only could your business avoid severe non-filing assessments, it may also SAVE TAXES by shifting income to a lower tax rate state.