How does a state tax auditor view the nexus?
Different states in the U.S. define the corporate nexus in different ways. Massachusetts defines the corporate nexus as (830 CMR 63.39.1): • the buying, selling or procuring of services or property; • the execution of contracts; • the exercise or enforcement of contract rights; • the maintenance of a place of business; • the employment of labor; and • each and every other act, power, right, privilege or immunity exercised or enjoyed in Massachusetts as an incident to or by virtue of the powers and privileges acquired through corporate form. While Massachusetts definition is seemingly all-inclusive, even they recognize many activities are not taxable. In Massachusetts Department of Revenue Ruling 05-8, we see that there are notable exceptions.
