Are you an online business with multi-state activity? If so, there’s one word that should be flashing in your mind day and night - and that’s NEXUS. The word translates into “physical presence” - or the degree of connection between your company and a jurisdiction. And it is that degree of connection which determines if you need to register in a state – and then comply with its sales and use tax requirements.
In the past, that connection was often quite apparent - like having an employee or a brick and mortar location. But these days that connection can be far less obvious. For example, simply working with a drop-shipper in a jurisdiction or even attending a trade show, can trigger nexus in some jurisdictions.
If you are based in Arizona – or have any activity in the state – it is important that you carefully review (and carefully consider) current nexus rules. Arizona nexus requirements, per the Arizona Department of Revenue, Pub 623 (June 2017), state that a business owner has nexus if:
• Employee(s) present in the state conducting business on behalf of the company for more than two days per year
• Maintenance of an office or place of business in Arizona
• Delivery of merchandise into Arizona on vehicles owned or leased by the taxpayer.
• Ownership or lease of real or personal property in Arizona.
• Independent contractors or other non-employee representatives present in Arizona for more than two days per year for the purpose of establishing and maintaining a market for the taxpayer.
As you review the Arizona nexus requirements (or those of any other state), it becomes very apparent that nexus is a very confusing issue. It can be a tricky thing even when you are looking at one single state – let alone several – given that requirements can (and will) differ in each. It is imperative that you do the necessary research to ensure that you understand all nexus requirements in all states/jurisdictions where you have any sort of business activity.
If you require assistance in this area - and/or are interested in having a nexus survey prepared (which reviews your activity in each state and helps to make a nexus determination) please contact us to discuss.
Other recent “Arizona (AZ)” posts by Gabrielle Luoma, CPA, CGMA:
- Arizona Sales Tax: Small Business Set-Up Process
- 3 Sales Tax Mistakes To Avoid in Arizona
- Arizona Business: Sales Tax Nexus Considerations
- Arizona MAAR Contractors: Simplified Sales Tax Facts
- Should Arizona Service-Based Businesses - Charge Sales Tax?