Establishing nexus for state and local taxation in the US
June 28, 2010
Bruce Clements of Kennesaw State University discusses the dangerous area of establishing an economic connection with States in the second of a three-part discussion of state and local considerations in US business planning.
States have limited powers under the US Constitution to impose taxes on taxpayers with no legal or physical presence in that state. Both the fourteenth amendment’s due process clause and the commerce clause restrict states from taxing income and sales where an insufficient legal or economic connection (nexus) exists between the state and the out-of-state company and/or transaction.
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