Taxes - N8. An out-of-state company has a remote employee located in Michigan. The out-of-state company has no sales or business activities in Michigan. Does the out-of-state company have nexus with Michigan under the MBT?

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N8. An out-of-state company has a remote employee located in Michigan. The out-of-state company has no sales or business activities in Michigan. Does the out-of-state company have nexus with Michigan under the MBT?

Yes. Under the MBT, a taxpayer, other than an insurance company, has nexus with Michigan if (a) the taxpayer has a physical presence in this state for more than one day in a tax year, or (b) the taxpayer actively solicits sales in this state and has unapportioned gross receipts of $350,000 or more sourced to this state. MCL 208.1200(1). The presence of a permanent employee in Michigan constitutes physical presence in this state and creates nexus.

However, absent Michigan sales and business activities, that company is unlikely to meet or exceed the filing threshold of $350,000 in allocated or apportioned gross receipts. MCL 208.1505. In that case, the out-of-state company need not pay the MBT or file a return.