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Companies are generally subject to state taxation based upon a concept called nexus. Provide an example of a business transaction that would create nexus and thereby an income tax reporting requirement for a company. Participate in follow-up discussion by providing your opinion on the “fairness” of the example provided by classmates. Support your points as to why or why not nexus should apply based on the facts presented.

Ganda Dakurah 

1 posts

Answer 1

Hi Prof. Forney & Class,

A nexus is a relationship or connection between two or more entities. For example, tax law is a relationship between a taxing authority, a state, and a business. A nexus must exist before a taxing authority can impose a tax on the enterprise, and it requires a substantial link between the jurisdiction and the business.

The concept of a nexus has become a complicated issue with the advent of online sales businesses that serve numerous states and countries.

An example of a nexus. One transaction that would create nexus and income tax reporting requirements is providing services in the state and accepting orders.

Nexus can vary by jurisdiction; it generally requires that a business commits to a particular type of action in the jurisdiction. A business might be considered to have a nexus in a location, for example, if it is a place where a business: Maintains an office, employs workers, Store products or supplies in a warehouse. A business might have an economic nexus in a state if it sells over a specific amount or threshold. (Murray, 2020).

That would require that you establish a sales tax rate for that location and collect it from any location resident who buys products from you. You would most likely also have to pay income tax to that state.

 Signcerely,

-Ganda. 

Reference.

Murray J., (2020). What Is Tax Nexus? Definitions and Examples of Tax Nexus https://www.thebalancesmb.com/what-is-a-tax-nexus-398356

Response:

Kehinde Kuyoro 

1 posts

Answer 2

Hello Prof & Class,

Sales tax nexus is the connection between a seller and a state that requires the seller to register then collect and remit sales tax in the state. Certain business activities, including having a physical presence or reaching a certain sales threshold, may establish nexus with the state. However, One transaction which would create nexus and income tax reporting requirements is providing services in the state and accepting orders in the state.

Thanks

Kenny

Reference:’

BIEK, J. A. State Law & State Taxation Corner. Journal of Passthrough Entities, [s. l.], v. 17, n. 1, p. 21-46, 2014. Disponível em: https://search-ebscohost-com.lopes.idm.oclc.org/login.aspx?direct=true&db=bth&AN=93744292&site=ehost-live&scope=site. Acesso em: 19 ago. 2021.

https://www.avalara.com/us/en/learn/nexus.html
https://www.thebalancesmb.com/what-is-a-tax-nexus-398356

Response

Question

The Arizona State Board of Accountancy is the governing entity for CPAs practicing in the state of Arizona. There are a number of rules and requirements for maintaining licensure in the state. In your discussion, refer to the Arizona Revised Statue 32-731. What does this statute require of Arizona CPAs and the business entity they own or operate under? Only summarize three or four main points of the statute so that your classmates may add something unique to the discussion. Participate in follow-up discussion by comparing the CPA licensure requirements posted by classmates to that of another state.

Bradley Dellrie 

1 posts

Answer 1

As the Arizona State Board of Accountancy governs Arizona-based CPAs, they oversee the rules and requirements for maintaining licensure our state. For our discussion, we focus on the Arizona Revised Statute 32-731 and what it requires of CPAs and the business entities under which they are allowed to operate. The formal name for this specific Statute is § 32-731 Certified public accountant partnership; qualifications (Justia, 2014).

As a first point, partners must pay a registration fee every two years in the state in which they practice. They must also register with the board as a partnership of CPAs. In addition to this, the partnership must meet two requirements, being that: a minimum of one partner is a resident, certified, full-time CPA in good standing with Arizona and; at least fifty-one percent of partnership ownership, voting rights and financial interests (direct and indirect), are held by CPAs in good standing with Arizona. An additional requirement is that a partner responsible for supervision of attest services in Arizona, or signs reports for attestation services on the partnership’s behalf, must be certified. They must also meet experience requirements for these functions, as established by the board. One last requirement worth noting is that when a partnership applies for registration initially, or renewal, must list each state in which the partnership is registered or has applied for registry, licenses, or permits as a CPA partnership. They must also list any and all past denials, revocations, and suspensions of the same registry. Operating as a CPA and CPA partnership is an important privilege that requires strict adherence to avoid legal issues and protect the financial sector (Justia, 2014).

Justia. (2014). 2014 Arizona Revised statutes :: Title 32 – professions and OCCUPATIONS :: § 32-731 certified public Accountant PARTNERSHIP; QUALIFICATIONS. Justia Law. https://law.justia.com/codes/arizona/2014/title-32/section-32-731/.

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