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In our video on U.S. State Taxes, Warren Dueck provides an overview of the concept of nexus as the trigger for applying a wide range of state taxes on Canadian business operations. Warren flags a recent expansion in the definition of nexus that has significant implications for Canadians who operate online businesses or where online sales are a component of the business (e.g., Fulfillment by Amazon (FBA)). The global pandemic has increased the importance of online commercial activities and prompted an abrupt shift to the virtual context to conduct business. The expanded definition of nexus should be monitored closely, and state tax implications should be evaluated for their impact on Canadian corporations and businesses operating in the U.S.

The video touches on sales and income taxes, as well as gross receipts taxes and the importance of getting resale certificates if your business involves providing goods to U.S.-based re-sellers. Warren points out that U.S. states are not the only taxing jurisdiction south of the border. There are roughly 10,000 different taxing jurisdictions that could impact a Canadian business, depending on nexus and the nature of the business operation itself. Canadian business owners must understand what taxes apply, how they are calculated, whether they can claim foreign tax credits, and what the reporting and payment obligations are. The last thing you want is a state taxing authority chasing you down here at home. You should be aware that States are active in collecting unpaid taxes in Canada.

There is a wide range of U.S. state taxes that could apply to you if you are doing business in the United States (some of them may surprise you). The key is to evaluate your business nexus with a state (or states) in the context of your operations and assess your tax exposure as part of planning your U.S. operations.

Watch the full video on U.S. State Taxes on Canadian Businesses

At Andersen, we frequently assist Canadians doing business in the U.S. to develop strategies to optimize their tax positions in the context of their business goals. We invite you to contact us to learn more about how we can help your business.

Watch the full video on U.S. State Taxes on Canadian Businesses

Andersen

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The member firms of Andersen in Canada focus on Canadian, international and Canada-U.S. cross-border tax matters. With offices across Canada, our tax professionals work with a broad range of businesses and individual clients to develop innovative tax solutions for a diverse range of issues. Our senior leaders and many of our professional staff have extensive experience in Canadian, international, U.S. and cross-border tax matters with major international accounting firms, as well as practical experience working with businesses and individuals.