State and Local
What is a Nexus Study?
It is difficult to understand Federal tax law; harder still to make sense of all the different state tax laws. State taxes include not only income tax, but also sales and use tax, franchise tax, property tax, etc. At Warren Averett, we have developed a process called a “nexus study” to determine in which states you should or should not be filing all the different types of state taxes. Nexus is defined as the “minimum amount of contact a company must have with a state to owe collection and remission of tax." Quite often, companies have nexus for sales and use tax, and do not have nexus for income tax. Our study helps clients identify these states and help qualify and quantify potential exposure of these taxes. After determining “nexus”, we are skilled in helping our clients determine the best way to handle each specific situation. Whether you are a new company, growing company, or a downsizing company, a nexus review can save you money and a great deal of time if done annually. The fee for the study depends on how many states are reviewed and the complexity of the issues in each state.