The States believe that authority exists for the States to conduct audits of multistate taxpayers whose targeted economic activities in the taxing state establish sufficient minimum contacts to support jurisdiction under the Due Process Clause as articulated by the Supreme Court in the Quill case. The purpose of such audits would be, in the first instance, to determine whether the taxpayer has Commerce Clause nexus with the taxing state. Accordingly, Program staff will provide support to states that seek to enforce requests for nexus information from out-of-state companies that regularly and systematically solicit sales in member states.
In addition, Program staff, utilizing public sources of information, conducts research to identify multistate companies that may have compliance issues in member states, evaluates the results of that research and takes appropriate action as a result of the research. Appropriate actions can range from no further action, to referrals to individual states, to referral to the Nexus, Audit and/or Executive Committees to authorize cooperative enforcement in select cases.
Depending on the availability of resources, Program staff can refer an audit to the Audit Program, the purpose of which will be to determine whether a multistate business has established nexus in Program states. The Program will finance the costs of such audits, through the determination of whether or not nexus exists. Assuming nexus exists, assessments may be issued for those participating states that are members of both the Nexus and the Audit programs.