Accounting Tests for Nexus

One of the things with nexus issues is that the people who are likely to create the most problems for your organization in this area will be the sales and marketing folks. And they NEVER have a clue. I know they don't come to my seminars, and I'm sure they're not doing any outside reading. So it kinda falls to the accounting folks to keep an eye on this.

Since nexus is created by having a physical presence in remote state, then accounting should look for clues:

1. Paying bills to contractors for installation of your product in other states. That's the kind of thing that gives you nexus.
2. If you own, lease or contract your own delivery trucks, look at where they go. Delivery in your trucks usually gives you nexus.
3. Look at any bills for warehousing charges in other states. That indicates you have inventory being stored in a remote state.
4. In the same vein, look for any space rental charges in remote states.
5. If you have goods drop-shipped from a shipper in another state, that may give you nexus there.
6. Are you writing commission checks to independent sales reps or marketing firms based in remote states?
7. And, of course, if you're reimbursing people for their expenses incurred in other states, you've probably got a nexus problem there.

Enjoy making sales and marketing miserable.

Sales Tax Guy
See disclaimer.

obg

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*picture note: Does this remind you of your sales staff?
This is Dirk of "The Swordsmen"
Bristol Renaissance Fair, Kenosha Wisconsin August 2008
www.theswordsmen.com/index.shtml