In addition to the limitations imposed by the Due Process and Commerce Clause, the Congress of the United States created an additional protection from nexus for certain potential taxpayers. Public Law 86-272 (15 USC 381-384) provides that no state may impose a tax on net income where the only contact between the taxpayer and the state is the solicitation of orders for the sale of tangible personal property and where orders, if approved, are shipped from a point outside the state. Out-of –state companies that limit their activities in Arizona to the solicitation of sales and shipment of tangible goods from a point outside the state therefore have no nexus to Arizona for income tax purposes, even if they engage in other in-state activities that would otherwise create nexus, such as maintaining an employee in the state. So long as its activities are limited to the solicitation of sales, an independent contractor (such as a salesperson or broker) will not create nexus for the out-of-state entity even though it engages in activities in Arizona that would otherwise create nexus, such as maintaining an office or owning property.
Determining Corporate/Income Tax Nexus within Arizona :
Arizona law follows Public Law 86-272 (15 USC 381-384) very closely. The State's interpretation and application of Public Law is reflected in Arizona Corporate Tax Ruling ( CTR ) 99-5.