Basics of Nexus: Understanding State Tax Issues

Author: Annette Nellen

Per the IRS Education Provider Standards this course must be COMPLETED by 12/31/2026 to receive credits. NOTE: Go to My Professional Profile in your CCH CPELink account settings to ensure your name, and PTIN number; matches your PTIN card

Determining if a business has "nexus" in a state is a significant tax question with answers that change regularly due to legislation, judicial decisions, and new ways of doing business. The ease of being a multistate company in today's e-commerce environment means more businesses face this question. As states search for tax revenues, state legislatures and tax agencies are earnestly looking for ways to find that a business has income and/or sales tax obligations in the state. This course explains the legal basics of income and sales tax nexus, state actions to broaden their nexus reach and the importance of the U.S. Supreme Court’s decision in the Wayfair case.

Publication Date: June 2024

Designed For
Practitioners seeking an understanding of income and sales tax nexus and the warning signs of when a business has tax obligations in a state.

Topics Covered

• Why nexus is important
• Defining nexus
• Income tax nexus and Public Law 86-272
• Sales and use tax nexus and Wayfair
• Nexus for other types of taxes
• Due Diligence: Being compliant and avoiding problems
• Looking forward

Learning Objectives

• Identify nexus for state and multistate tax purposes
• Recognize the judicial and constitutional construct of nexus
• Identify factors that likely cause a business to have income or sales tax nexus
• Describe actions by states, Congress and the U.S. Supreme Court that affect nexus
• Identify the year in which the first legislation was enacted in New York with respect to Affiliate (or Associate) Nexus

Level
Basic

Instructional Method
Self-Study

NASBA Field of Study
Taxes (2 hours)

Program Prerequisites
None

Advance Preparation
None