Establishing Your Wyoming Company Nexus
Nexus. What is a business nexus?
“Nexus” refers to all of the links or relationships that allow your company to operate. Some of these include where your bank account is established, your company’s phone numbers, it’s mailing address, where any physical space is located, and more. You can fully utilize our Wyoming virtual office service to help create the ultimate business nexus in Wyoming.
How does a state tax auditor view nexus?
Different states in the U.S. define corporate nexus in different ways. For example, Massachusetts defines it 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’s 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.
Public Law 86-272 (15 USC 381) Exemption
Passed by U.S. Congress in 1959, this law prohibits a state from imposing an income tax where a taxpayer’s activities are limited to solicitation of orders by such person, or his representative, in such State for sales of tangible personal property, which orders are sent outside the State for approval or rejection, and, if approved, are filled by shipment or delivery from a point outside the State. This exemption is only for companies that sell tangible personal property, so for firms that offer a service or other product, it is unavailable.
Physical Presence Test
Most court challenges have focused on whether out-of-state corporations must pay sales tax in other states it sells products in. Cases like National Bellas Hess, Inc. v. Department of Revenue of Ill., and Quill Corp. v. North Dakota, have shown that a foreign company only pays tax in a state in which it has a physical presence.
Steps To Establishing Your Wyoming Nexus
Establishing your Wyoming corporation or LLC is only the first step of establishing a nexus of business activity in Wyoming.
- Establish a Wyoming corporation or LLC.
- Establish the company’s principal office address in Wyoming, either at your registered agent’s address, or another address you acquire in Wyoming.
- Establish a Wyoming phone number (307 area code) and have the number listed in directory assistance 411.
- Open a Wyoming-based bank account, or a bank account that is not in your home state.