Many of the states have become more aggressive in asserting that non-residents have income and sales tax liability in their state because of earnings or sales in their state. The rules in the states are different and the issue revolves around whether you have a physical presence, called nexus, in that state, under their rules.  It’s even possible to have income taxable in two states because of the differences in tax laws. One state has determined that tele-working in their state is a physical presence. If that’s not complex enough, the nexus rules are different between sales and income taxes and federal law is involved as well. While a company may not be required to collect and remit sales taxes because of federal laws, they may at the same time be liable for income taxes. I have prepared returns in about 30 states over the past few years and can help you tip-toe among the different tax agencies and laws. Nexus laws in selected states can be found here.

A land mine in some states is registration. Before your company does business in a state, many states require the company to register with one of various state agencies and gain permission to do business there. Registration can be time consuming and the rules vary from state to state. Once you’re in the system, you then have the privilege of filing tax returns and paying taxes in that state.