Business Licenses Q&A: Limiting Nexus (Updated)

Audience Question: The topic of nexus has come up in different industries and companies that I’ve been involved with through the years. Has Quill or Interstate Commerce laws been used to try limiting nexus for business licenses? If so, has it been successful?

Joe Vitulli's Response: I have seen businesses try to use interstate commerce and the Quill decision to try and limit nexus, but so far they haven’t been very successful. A lot of the case law in Quill is being modified with the decisions and various pieces of legislation on both the federal and state levels. Everything is in a state of flux at the moment.

You can certainly try and push back but you may find yourself banging your head against a wall. The various states, county and local Authorities simply don’t care. The reality is what it is in these cases and you will ultimately need to get the license. A better bet to save your sanity may be to utilize some licensing software to better organize and research your license requirements in a given jurisdiction.

Andrea Jaffe's Response: Each jurisdiction is different, and some specifically have statutes that require a physical location in order to impose their business license. Where the statutory language is less specific, it becomes much more likely that the jurisdiction will try to use a broad interpretation regarding conduct of business activities within their borders. Remember that laws already on the books are strong tools for municipalities to use to increase their revenue (in this case through licensing fees) without creating new, unpopular, taxes. We are seeing much for aggressive enforcement and expansion of imposition as a current trend, rather than successful limitation on the part of the businesses trying to avoid imposition.

(Author's Note: Business Licenses, LLC hosted a webinar on June 10th, 2014. During the Q&A, the audience submitted questions. We are going to periodically post those questions to this blog along with answers from the panelists.)

By Alan Ruttenberg