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IA company has NC telecommuter who makes phone sales and attends trade shows. What about nexus?

Full Question: My client has an employee in North Carolina who works from a home office. 99% of what he does is make phone solicitation to customers in and out of North Carolina. The other 1% is attending trade shows. The company has no other physical presence in the state and all customer orders are placed, approved, and fulfilled in the Iowa office. Does this company have North Carolina sales tax nexus?

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Answer:

Diane Yetter photoThe presence of the employee in North Carolina and the employee's soliciting activities do create North Carolina sales tax nexus. A retailer is considered to be engaged in business in North Carolina if they are "maintaining, occupying, or using permanently or temporarily, directly or indirectly, or through a subsidiary or agent, by whatever name, any office, place of distribution, sales or sample room, warehouse or storage place, or other place of business for selling or delivering tangible personal property, digital property, or a service for storage, use, or consumption in North Carolina..." A retailer is also considered to be engaged in business in North Carolina if they are "permanently or temporarily, directly or through a subsidiary, having any representative, agent, sales representative, or solicitor operating in North Carolina in the selling or delivering..." A retailer who makes a remote sale is engaged in business in North Carolina and is subject to sales and use tax if the retailer solicits or transacts business in North Carolina by employees, independent contractors, agents, or other representatives, whether the remote sales subject to tax result from or are related in any other way to the solicitation or transaction of business. A "remote sale" is defined as a sale of tangible personal property or digital property ordered by mail, telephone, via the Internet, or by another similar method, to a purchaser who is in North Carolina at the time the order is remitted, from a retailer who receives the order in another state and delivers the property or causes it to be delivered to a person in North Carolina. It is presumed that a resident of North Carolina who remits an order was in North Carolina at the time the order was remitted. As you have an employee working from a home office as a solicitor in North Carolina, you have North Carolina sales tax nexus.

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