Nexus in Oregon
Oregon nexus is created by having a physical presence in the state. A business has nexus in a state if it has a physical presence there, such as an office, warehouse, or retail store. If your company receives a benefit from business conducted in Oregon, you might have nexus.
Economic Nexus Overview
Economic nexus is a concept that relates to a business’s obligation whereby out-of-state sellers are liable to collect and remit sales tax in U.S. states under certain conditions. States like Oregon join others in recognizing an economic nexus standard for various activities.
Factor Presence Nexus
Under a factor presence nexus standard, a company’s business activities or income will be subject to tax in a particular state if one of the company’s apportionment factors exceeds the state’s statutory threshold.
What Determines Nexus in a State?
Oregon Nexus: Created by physical presence.
Louisiana Nexus: Determined by business operations in the state.
What Establishes Nexus in a State?
Sales tax nexus requires sellers to collect sales tax when reaching a monetary or transactional threshold. Certain business activities may establish nexus with the state.
- Property, payroll, or sales can establish factor presence nexus.
- States like Alabama, California, Colorado, and others have adopted some form of sales factor nexus presence standard.
- 10 states have adopted factor presence nexus standards for tax purposes.
Case Example
The case examined whether banks without physical presence in Oregon had nexus. Their substantial business activities in the state raised nexus concerns.
Corporate Tax Sheltering
The factor presence nexus standard aims to deter tax sheltering and promote equity in business activity taxes.
State Market Contributions
States may claim nexus based on a business’s market presence and receipts.
Public Law 86-272
This federal statute exempts out-of-state businesses from state income tax if they only solicit orders fulfilled outside the state.