Did you know that states are going after remote sellers who don’t file tax returns in their state? States are increasingly becoming more aggressive as businesses turn to e-commerce strategies to sell their goods and services. What’s perhaps less known is how this is becoming a personal tax issue. MWE Tax Director Joseph Pizzimenti offers his insight on these issues.
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The issue with nexus that really is developing to more problematic for many entities is that states are always looking for increased revenue. One of the most lucrative sources of increased revenue right now are entities that are not presently filing tax returns in those states. So, a remote seller, or a remote entity. And that could be because those entities don't have a physical location in the state, may not even have an employee in the state.So, over the past 10 to 15 years, especially with the advent of more and more activity on the internet and online transactions, in the retail area especially, states have been adopting more aggressive statutes that redefine what is the requisite activity so that they can assert jurisdiction over a remote or non-present entity in their state.So, for example, if I had a business that was purely in New York, but we sold enough product into the state of California, California may have provisions now that could say we have enough presence in the state, even though I may not have physical presence in the state, to assert jurisdiction. With respect to those taxes, individuals that run those companies may have personal liability if those taxes are not properly calculated, paid, and remitted to the state. And that, to me, is why nexus is increasingly becoming a personal matter and not simply an esoteric discussion amongst legal experts, and among the courts, and among various federal or state tax administrators.