Resources

A tax glossary for people who aren't tax people.

Straight, direct answers to the concepts that come up most for growing companies — no jargon left unexplained.

Tax Concepts

What Is the R&D Tax Credit?

The R&D tax credit is a federal (and often state-level) tax credit that rewards companies for qualified research activities — like developing or improving products, software, or processes — by directly reducing the tax they owe, sometimes even before the company is profitable.

What Is Sales Tax Nexus?

Sales tax nexus is the connection between a business and a state that's strong enough to require the business to register, collect, and remit sales tax there — established either by a physical presence in the state or by crossing an economic activity threshold, such as a set amount of sales revenue or transactions.

What Does a Tax Director Do?

A Tax Director oversees a company's tax compliance and planning end to end — preparing or reviewing returns, managing the tax provision, identifying credits and planning opportunities, handling audits, and advising leadership on the tax impact of major business decisions.

What Is ASC 740?

ASC 740 is the accounting standard that governs how companies calculate and report income taxes in their financial statements — covering current and deferred tax expense, deferred tax assets and liabilities, and valuation allowances, commonly referred to as the "tax provision."

What Is a Section 382 Study, and Why Do NOLs Matter?

A net operating loss (NOL) occurs when a company's deductions exceed its income, and can generally be carried forward to offset future taxable income. A Section 382 study analyzes whether an ownership change — common after a funding round or acquisition — limits how much of that NOL a company can actually use going forward.

What Is Income Tax Nexus?

Income tax nexus is the connection between a business and a state strong enough to require the business to file and pay state corporate income tax there — typically created by having employees, property, or a certain level of sales activity in that state.

What Is a Voluntary Disclosure Agreement?

A voluntary disclosure agreement (VDA) is a formal arrangement in which a business proactively comes forward to a state about unpaid past taxes — usually sales tax or income tax — in exchange for a limited lookback period and reduced or waived penalties.

What Is the Difference Between Economic Nexus and Physical Nexus?

Physical nexus is created by a tangible presence in a state — like an office, employees, or inventory — while economic nexus is created purely by crossing a state's sales revenue or transaction-count threshold, even with zero physical presence, following the Supreme Court's 2018 *South Dakota v. Wayfair* decision.

What Is a Fractional Tax Department?

A fractional tax department is an outsourced arrangement where a company gets a dedicated, senior tax professional — often called a "VP of Tax" — plus a supporting team, for a fixed monthly fee, instead of hiring a full-time in-house tax department or relying on a traditional accounting firm billed by the hour.

How Is VPTax Different From a CPA Firm?

VPTax provides one dedicated Tax Director as your embedded point of contact for a fixed monthly fee, focused only on tax — while a traditional CPA firm typically assigns a rotating team billed by the hour and often bundles tax in alongside audit, bookkeeping, and other services.

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