Multi-State Tax Compliance
Written by Aparna Devalla, CPA
Curated by Rubric Financial
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What Creates Tax Nexus
- Physical presence nexus is triggered by having employees, offices, inventory, or property in a state.
- Economic nexus is triggered when your sales exceed a state's revenue or transaction threshold, even without physical presence.
- Hiring a single remote employee in a new state can create income tax, payroll tax, and unemployment insurance obligations in that state.
- Using third-party logistics or warehouse services in a state can also create nexus for sales tax and income tax purposes.
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