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Is Your Company Subject To Taxes In Other States?

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The pandemic and related economic recession have diminished most state’s budgets at a time when officials are under pressure to help impacted businesses and individuals. Faced with limited options, we expect more states to increase their audit activity, with a focus on businesses located outside their borders. This means that businesses with customers outside Washington State may have additional filing requirements for sales or income taxes.

It is important to understand where your business activity may have created a taxable situation in another state (a concept called “nexus”). If nexus has been created, understanding the potential exposures can help you make informed decisions regarding addressing the risk. Nexus issues can also arise in other contexts, such as financial statement disclosures and transactions. For example, when buying or selling a company, an acquirer will need to understand the tax exposure from other states and if they have been properly addressed.

So what creates nexus? Oftentimes, it’s less than you think and it can be driven by not only the business and its employees, but their customers as well. To learn more, review our Nexus White Paper.

Berntson Porter is here to help businesses navigate these unprecedented times. Visit our Resource Center for up-to-date information about COVID-19 legislation that impacts you and your business