In those states, well this is the hole rule. The rule when you're in a hole is number one, stop digging and number two, measure the hole so that you can dig your way out of it. So the easiest thing for companies to do is to look at their exposure in the multiple states that they've potentially created nexus in and try and peg the date that Nexus was created. This can be a little difficult but the good news is in California, for example, California is one of the more aggressive states when it comes to multi-state tax issues. The reason is California figured out it could tick off a lot of people who are out of state by trying to collect tax from them and those people don't vote so there's no harm but the reality of the situation is if California doesn't have cameras on its borders, it's not tracking your cell phone movements. For the most part, it's not really going to have any record of your Nexus creating activity in most cases so the good news is this isn't about what you've done. It's partially about what California knows and how likely it is that you're going to get caught. So number one is to measure your exposure. Number two is to measure the likelihood that you're going to get caught and where companies really start having issues is when interacting with other companies. So for example, if you're going out and doing a bunch of prospecting and none of those potential clients sign up with you,
you may not get caught but where we see the most headache with this is through a vendor or customer that's located in a different state. Because a company will have been out of compliance for a while and what will happen is through the audit process, either on the sales in the use tax side or the state income tax side, the chain will eventually lead back to the company. One of the reasons that the CDTFA, the California sales tax department, audits companies is to produce the leads to go after other companies. So when they pull companies' purchase invoices, they're looking at all of their vendors that have not charged tax and then out of that list they're trying to determine why. So if you are doing Nexus creating activities in a state and invoicing customers there and those Nexus creating activities are readily apparent from the invoices, you're cruising for prison so the long and the short of it is, stop digging. measure the hole and then hire an expert to get you out of it, because the stuff is complicated and without knowledge of how the states work and how enforcement works on the state level and in helping you plan around it, this problem isn't going to get finished. I guarantee you that with the advent of technology, with the way the states are going because this has become a very huge issue, it's only a matter of time until you get caught so it's better to have a plan in place ahead of time than to risk being caught without knowing it's coming.