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Economic Nexus Triggers Tax

Wayne Berkowitz, CPA, J.D., LL.M. 04.09.2014 | Client Alert

Following the lead of many other states, you no longer have to set foot in New York to be subject to the taxing authorities.  Now, if a corporation is “deriving receipts” from New York, it will be subject to tax.  A threshold amount of at least $1 million in sales of products or services — including interest income — to New York customers will subject one to the tax.  Detailed rules for determining the sourcing of income have been implemented as part of the New York Budget legislation.

New York has historically required some type of physical presence to submit to its taxing jurisdiction.  Whether or not economic nexus is a permissible basis to be subject to a state’s taxing authority is still unsettled and is likely to be the subject of litigation in the very near future.

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