When is Sales Tax Nexus Created by Visiting a State?

Some states provide more time leeway than others when it comes to temporarily working in that state. For example, many permit you to go into the state for up to 30 days without creating nexus. Other states have a lower threshold, of around 14-16 days. Still other states have no threshold at all. Hawaii and Texas both claim nexus after just a single day within state borders. Texas law provides that if you attend a trade show and do nothing more than offer free information you have established nexus for tax purposes.Here are just a few more states that have very restrictive in-state activity requirements:

  • California – 16 days in state at trade shows/year will create nexus
  • Texas – 1 day at a trade show = nexus
  • Michigan – 1 day’s work in state = nexus
  • Minnesota – 4 days in state = nexus
  • Massachusetts – simply sending out credit card offers equaled nexus
  • Illinois: One appearance at a show may be enough to create nexus for use-tax purposes.
  • Massachusetts: Soliciting sales at a show for three or more days subjects vendors to use-tax collection.
  • Texas: Based on a recent ruling, actual sales (as opposed to solicitation of orders) are subject to franchise tax.

If you take orders in a state, regardless of the number of days you spend at the trade show that could create nexus.  If you take the order and deliver product at the show, you’re going to have nexus.

Learn more about managing your tax liability by watching this 4.5 minute video.  Then, take the free Needs Assessment Survey courtesy of our 3rd Party Sales Tax Automation Partner, Avalara, to see if you are in compliance with Sales Tax collection and reporting.

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This entry was posted in Enterprise Resource Planning (ERP), February 2012, Newsletter. Bookmark the permalink.

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