I recently heard from a couple who lived in Virginia. They make all of their income off of the internet, selling some of their own products but mainly acting as affiliate marketers. That means that they put up websites and drive traffic to those websites. The websites have some kind of compelling information that makes people like what they see and there are also ads on the pages that people can click on to buy products. For everyone who buys, this couple gets paid a commission. They are considered an affiliate marketer for many companies.
They have lived in Virginia for the past few years and because they didn’t actually ship products or work in other states, they didn’t think they would ever have a nexus issue.
Then they got a notice from another state. It was a State Nexus Questionnaire and along with it was a pretty aggressive letter that basically said, “Hey, we know you really are making money in our state and we want our piece of the tax you pay!” This other state was North Carolina. Apparently, his mother lived in North Carolina and he had his name listed on the title of her house. This was done for estate planning. He didn’t live in North Carolina and in fact, hadn’t lived at home for years.
But North Carolina tracked him down and now he had to prove he didn’t work in North Carolina. Since his work was all from his home office, it wasn’t easy to prove where he really was. After numerous phone calls, and letters, he got it resolved…at least we hope so.
If North Carolina had been successful in proving that he did indeed spend some of his time there and that he worked there, they may have hit him up for sales tax nexus and even income tax nexus.
That’s a real life example and that’s what is happening right now. The smallest thing can trigger a nexus issue.
I hope you can join us today, Thursday, on USTaxAid.com/radio for our interactive radio replay of “Nexus Issues to Pay Less Tax”. It’s at 4 pm Pacific, 5 pm Mountain, 6 pm Central and 7 pm Eastern.
Join us for our USTaxAid Interactive Radio Replay of “Nexus Strategies to Pay Less Tax” by going to http://www.USTaxAid.com/radio on Thursday, December 2, 2010 at 4 pm Pacific, 5 pm Mountain, 6 pm Central and 7 pm Eastern. You’ll be able to follow along and post questions in our live chat room.