Nexus Sales Tax
Nexus, also known as sufficient physical presence, is the determining factor of whether an out-of-state business selling products into a state is liable for collecting sales or use tax on sales into the state. Nexus is required before a taxing jurisdiction can impose its taxes on an entity.
Most companies are not aware of the issues that create nexus. While it may not be a big deal on it’s own, if they have customer’s in states where they have nexus, and that state imposes sales tax on the type goods/services they are selling (some states tax SaaS subscriptions), they can be running up the meter on what could be a big liability. In a VC or M&A transaction, this is always an area of scrutiny.
So, we ask the questions that help us determine where the client may have nexus and also where they have customers to assess if there is a looming liability, and if we need to take immediate action, or this is just something that needs to go on the “watch” list.