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What is tax nexus?

Answer: : Nexus is the determination that a company has sufficient “connection” to the state to allow taxation. This connection is primarily based on three factors:


  1. Offices or assets in the state
  2. Employees or payroll in the state
  3. Sales in the state

Normally, if a Company has offices and assets or employees payroll in a state, the “connection” is established. However, sales in a state, by itself, do not rise to the “connection” level. One of the other two factors must be present to qualify.

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