In this article published in Tax Analysts’ State Tax Notes magazine, partner Jack Miles and special counsel Andrew Lee discuss new state tax laws that potentially subject service providers to a state’s taxes, even though the service provider has no physical presence in the state. These new state laws, which base taxability on “economic nexus” rather than physical presence, impact not only Internet companies, but also professionals and other brick and mortar service providers. Some states that have adopted economic nexus rules have also adopted “market apportionment” rules, which can cause services performed outside of a state to be subject to taxes in the state. Together, economic nexus rules and market apportionment rules create the risk of increased state taxation of service providers. These rules also raise important issues under the due process and commerce clauses of the U.S. Constitution.