Does anyone know of an easy way to identify whether non-sales employees working in a particular state establishes nexus for sales
Easy way to identify sales tax nexus
Answers
I don't have a list of states that do/don't count employees as nexus material, but I am aware that more states are doing this. If I recall correctly, states like Washington and New York are 2 who don't care who is earning a paycheck in the state. If your company is paying someone there you have 'earned' nexus.
My approach to sales tax is based on where the product or service is received or used. Many states have revamped their tax code to include digital
I have found that the definition of nexus is different in each state. Michigan once tried to establish nexus over a company I was at, because we paid an independent contractor who lived in Michigan but provided services anyplace but Michigan.
They found us through the 1099. Now that was really reaching. Other states feel that if a salesperson comes into their state, there is nexus vs having a sales office in that state.
Some states are even making it quite impossible to obtain a sales tax certificate because they insist on having the owner take full financial responsibility. Which part of the sanctity of a Corporation don't they understand, and what happens when you have multi-level corporate ownership (but I digress)?
I see three choices (until there is a sales tax revolt).
1. Charge everyone sales tax and use a 3rd party to help you manage that aspect.
2. Charge those customers who you really believe live in a nexus state (other than your own); make sure you document everything!
3. Charge only in your home state and let the foreign states find you and make the case that they have nexus (make sure you document everything!).