Tuesday, August 05, 2008

Do Trade Shows Give You Nexus?

As usual, it depends on the state. Some states are strict, some states are more laid back. The best I can do is give you the factors that states may consider to determine if you have nexus.

In no particular order, here are the factors any of which could give you a problem:

1. How many person-days per year are you doing trade shows in the state? The fewer person-days (this used to be called man-days, but I'm being politically correct, if obtuse) a year you spend in the state obviously will reduce your chances of having nexus.

2. Do you take orders AT the show? Or do you merely demo the product and hand out literature. If you take orders, that is gonna be a problem in many states. On the other hand, you may try to be tricky and pretty much close the sale but tell your customers that you'll take care of the paperwork after the show. Keep in mind that the states aren't stupid. They've found most of the loopholes.

3. What's the target market for the show? If you're doing an international show in Chicago at McCormick Place for a few days a year, and you don't take orders at the show, you're probably not going to have a problem. But if you do a home improvement show at a local expo center, that's targeted for the local market, you may have a problem regardless of the number of days you do the show or whether you take orders.

4. Do you actually deliver the product at the show? If so, you should be charging sales tax. Nexus isn't even an issue anymore. It's an INTRAstate sale. Unless the state allows you a temporary permit to collect taxes just at the show, you'll have to register, which really complicates things.

Here's the overall gist. Generally, the physical presence that will give you nexus in a state will have something to do with helping you exploit that state's marketplace. If you're doing a show in a state, and you're trying to sell to that particular state, and you do it more than a few days a year, you'll probably have nexus.

And don't forget that you may owe use tax, in that state, on the property, samples and equipment you bring to the show. Thought you were off the hook, eh?

The Sales Tax Guy

See the disclaimer - this is for education only. Research these issues thoroughly before making decisions. Remember: there are details we haven't discussed, and every state is different.

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