Regular, systematic displaying of its products by catalogs, samples or the like. Physical presence within a jurisdiction has long been recognized as a requirement for nexus, although the trend in recent court decisions appears to be a de-emphasis of the physical presence requirements in recognition of the changing business environment. Tax treaty provisions, including the permanent establishment rules, generally do not apply to the states. These rules are are not applicable for purposes of determining if a foreign entity has a taxable presence in a particular state. For purposes of determining taxable nexus, the states are bound only by the laws and constitution of the U.S. Note, however, if the taxpayer is claiming a treaty exemption, it provides an indication that the foreign corporation may have a presence in the U.S. since it probably has property, payroll or sales in the U.S. 2.
Corporations can warehouse, assemble and manufacture goods within a Free Trade Zone.
Such goods are exempt from U.S. customs duties and federal excise taxes until sent from the zone. As a general rule, storing property within a state will be sufficient to establish taxable nexus. The value of such property is then included in the numerator of the property factor of the taxpayer's apportionment formula for that state. Note 7 3. Determine the percentage for each factor in each state in which a corporation is taxable.