You might think first and foremost about the Internal Revenue Service when you think about taxes. If you live or do business in California, however, state taxes are a big piece of what you pay, and surprisingly, you might have California tax exposure even if you never set foot in the Golden State.

In fact, as many individuals and companies across the country and the world are aware, California aggressively draws people into its tax net. California has high individual (13.3 percent) and business (8.84 percent) tax rates. When you add the state’s notoriously aggressive enforcement and collection activities, California does well with both residents and nonresidents on any California-source income.

California can tax you on all of your California-source income even if you are not a resident of the state. If California finds that you are a resident, it can tax you on all of your income regardless of source. A nonresident’s income from California sources includes income from a business, trade, or profession carried on in California. If a nonresident’s business, trade, or profession is carried on both within and outside California, the income must be allocated across multiple states. Not surprisingly, California often finds a way to steer more dollars toward the state. For that reason, some multistate businesses try to compartmentalize their California and non-California operations.