Determining a Physical Presence
For any e-business, an important part of getting a handle on when and where to collect and remit sales taxesFor any e-business, an important part of getting a handle on when and where to collect and remit sales taxes on online sales is determining the states in which it has nexus, or a physical presence. Answering that question can be tricky, though. For one thing, each state defines nexus differently. For another, as e-business models rapidly change, becoming more tightly integrated with brick-and-mortar business, e-commerce companies may soon find they have nexus in far more states than they used to. Take online bookseller barnesandnoble.com, for example. The site, based in New York, was originally set up as a legally separate company from the brick-and-mortar entity, Barnes & Noble Inc., also in New York. So, even though Barnes & Noble, with 520 physical stores across the nation, clearly has nexus in most states, the online entity only had to collect and remit taxes on purchases in the states in which it considered itself to have nexus. According to a barnesandnoble. com representative, those states are New York (barnesandnoble. coms headquarters), New Jersey (its distribution center), and Virginia and Nevada (where it has Web servers).
Even though customers can currently return merchandise purchased online to any of Barnes & Nobles physical stores across the nation, this doesnt change where the barnesandnoble.com company has nexus, company officials said. Thats because online customers returning merchandise at Barnes & Noble stores can receive only store credit for the return, not a cash or credit card refund.