rs-residency-multi-state-tax-issues

So imagine that you’re a company and you’re based in Texas and you go to work every day in Texas. Your employees are in Texas, sure you sell products outside of Texas but a lot of companies sell products outside of Texas, and over time as your business grows and scales you begin to have more and more contacts with other states. Maybe you have clients in Oklahoma or California or Florida. Maybe you sell something that requires installation and so you have to send either employees or independent contractors to various states to help install products. Maybe you offer complimentary services. You sell software, you need somebody to help train your clients or to teach them things. Maybe you send salespeople to two different locations. Maybe you have an employee and she’s been with you for ten years and she gets a job offer and she wants to move to San Diego. The problem that we see with a lot of businesses in this digital age and in the age of routine domestic airline flights and the ease of travel is companies start to develop more and more of an interstate web and for a company that’s been based in Texas, that has ownership that’s been based in Texas their entire lives,

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Well the reason I do is because the issue has often been ignored. What happens in the course of a company, even in particularly large companies, is you get a group of executives together – you get a controller, you get a CFO, the whole financial team, etc. – and you’re chugging along but nobody actively realizes what the consequences are and what the nexus activities are in other states. A company can go along and organically create nexus for itself by just a few simple activities in other states. A company moves into a different state, you get some sales people that go there, you go visit a client a couple times a year and suddenly you have engaged nexus creating activities in that state depending on the individual laws and the jurisdiction of that state. Now the problem is is that once you’ve created nexus, it’s not like you can take it back. you’re either pregnant or you’re not pregnant. So when you have a nexus creating activity there, you’ve touched that state and so the big issue is

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