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As more and more companies become multi-state, the terms of what creates nexus with a state are consistently changing. Nexus is one of the tests a company must go through to determine if they are required to file a return for the state. Michigan has gone through an overhaul of the taxing structure, moving recently from the Michigan Business Tax (MBT) to a more simplified method of reporting, the Corporate Income Tax (CIT). As part of the CIT nexus determination, the newly released Revenue Administrative Bulletin (RAB) 2013-9 defines the term “Actively Solicits” for purposes of determining if a taxpayer has nexus with Michigan.

“The CIT defines ‘actively solicits’ to mean either of the following:

(i) Speech, conduct, or activity that is purposefully directed at or intended to reach persons within this state and that explicitly or implicitly invites an order for a purchase or sale; or

(ii) Speech, conduct, or activity that is purposefully directed at or intended to reach persons within this state that neither explicitly nor implicitly invites an order for a purchase or sale, but is entirely ancillary to requests for an order for a purchase or sale.

Active solicitation includes, but is not limited to, solicitation through: (1) the use of mail, telephone, and e-mail; (2) advertising, including print, radio, internet, television, and other media, and; (3) maintenance of an internet site over or through which sales transactions occur with persons within Michigan.”

Keep in mind the State of Michigan has identified the following as forms of active solicitation: sending credit applications, sustaining an internet site with online shopping, services or subscriptions, distribution of mail order catalogs, and media advertising.

Determining nexus with any state is never an easy task. To assist with your state needs, please contact a member of our firm’s SALT Practice or your local UHY LLP professional.