Nexus Program

The Nexus Program serves out of state taxpayers by providing education on how their business activity creates Nexus with Arizona. Taxpayers may work directly with department auditors, or indirectly by way of a duly appointed representative. The program auditors facilitate the licensing, registration, payment process and provide education to ensure ongoing compliance with state and municipal tax laws.



"Nexus" is the connection required to exist between a state and a potential taxpayer such that the state has the constitutional right to impose a tax. The United States Constitution limits the states’ right to tax through the Due Process Clause and the Commerce Clause 


Due Process Clause:

The Due Process Clause of the Fourteenth Amendment requires some definite link, some minimum connection between a state and the person, property, or transaction it seeks to tax. The most minimal connections will satisfy this requirement. The connection need not include physical presence in the state. Due Process also requires that the income attributed to the State for tax purposes must be rationally related to values connected with taxing state. This last requirement is rarely a bar to enforcement of tax.

Commerce Clause: 

The Commerce Clause of the Constitution (Article 1, Section 8, C13) gives to congress the power to regulate commerce among the states. Therefore, a state may not impermissibly affect interstate commerce without congressional authorization. The U.S. Supreme Court held in Complete Auto Transit (430 US 274 (1976)) that a state does not impermissibly affect interstate commerce if it meets each of four tests:

  1. The taxed activity has a substantial nexus to the taxing state.  
  2. The tax is fairly apportioned among states  
  3. The tax does not discriminate against interstate commerce  
  4. The tax is fairly related to services provided by the taxing state. 

To learn more about Nexus in Arizona for transaction privilege and use taxcorporate income tax and individual income tax.


For further assistance, please email  [email protected] or call (602) 716-7083.