You are the tax advisor for a furniture manufacturing company (the Company). The Company is domiciled and headquartered in State A. All of the Company's manufacturing is conducted in State A. The Company does not have any physical presence (personnel, warehouses, manufacturing operations, or offices) in any state other than State A. Due the size of the furniture and the cost to ship, the Company does not ship any furniture. Rather, furniture retailers from all over the United States send carriers to pick up the furniture at the Company's warehouse in State A. The Company's #1 retailer is Frank's Furniture. 50% of the Company's annal sales of approximately $100 million are to Frank's Furniture ($50 million annually). Frank's Furniture is the #1 retailer of furniture in the United States and has retail stores in all 50 states. Frank's Furniture has 1 distribution center in the United States, in State B, where all the furniture it purchases from all retailers, including the Company, are delivered before the furniture is shipped off to Frank's Furniture's retail stores throughout the United States, including those in State B.

State B has enacted a gross receipts tax. Under State B's gross receipts tax, if a company has more than $100,000 in sales in State B in a particular year, such company is subject to State B's gross receipts tax. State B has audited the Company and is asserting that all of the Company's sales to Frank Furniture ($50 million annually) are subject to State B's gross receipts tax.

The Company has asked you to provide advice as to whether the Company has nexus in State B and whether it is subject to State B's gross receipts tax on its $50 million in sales to Frank's Furniture? What arguments would you make on the Company's behalf that it does not have nexus with State B, if any? Address any weaknesses in such arguments and any counter-arguments that State B may raise to such arguments and the potential strength of such counter-arguments. Is there anything the Company could do to strengthen its position