Question on Tax Nexus

[river69]

Hello,

I currently have an ecommerce business based in California. I am considering hiring a person in Texas to handle email support. My question is what is the best way to structure the agreement so I don't have pay sales tax for orders coming from Texas. We ship everything out of California, but don't want to unneccessarily establish a nexus in Texas.

For call center companies, do your clients charge tax for their orders if their only relationship is with you in a particular state?

I heard that treating the person in Texas as a contractor should be sufficient, or do they need to have their own corporation established.

Thanks.

[gkern]

I am certainly not a lawyer (or the att. general of Texas), but have worked with companies with a direct sales model and can give you my understanding of the nexus issue.

My understanding is that if you create a presence in a state that charges sales tax by hiring staff or contracting with a subcontractor (outsourcer) that you would be required to collect sales tax from purchasers in that state.

An alternative is to hire someone or outsource to someone in a nexus friendly state (state that does not charge sales tax) like NV, OR, etc.

You can also potentially get an a waiver from the state, but that normally requires that a significant number of jobs would be created.

I hope that helps. Email me if you have other questions: greg.kern@sitel.com