The question of when the activities of an affiliate in a state can subject a corporation to tax in that state has been a continuing one for many years.  Retailers have confronted the problem in connection with whether activities of a corporation owning and operating stores in a state can subject an affiliate to tax if the affiliate’s only activities are selling products over the Internet.  The U.S. Supreme Court has determined that ‘‘the crucial factor governing [tax] nexus is whether the activities performed in [a] state on behalf of the taxpayer are significantly associated with the taxpayer’s ability to establish and maintain a market in [the] state for the sales.’’  This article discusses and criticizes a recent New Mexico case that held that a store corporation’s activities could subject an affiliated Internet corporation to tax even though the store corporation was not acting on behalf of the Internet corporation.  It appeared in the July 22, 2013 edition ofState Tax Notes.

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