Apparently, your out-of-state client is not a CPA or Tax Attorney well versed in the tax laws of whatever state they are in. (You forgot to tell us.) But generally, so long as you do not have a physical business presence in another state, and do not conduct business in another state, you have no tax liability to that state. But that's "generally". It depends on the state. I would suggest that you seek the advice of a qualified tax attorney or CPA in your state of TN, instead of making decisions based on us "armchair" CPAs in this public user-to-user forum. Personally, Based on my interpretation of your post, I don't seen any tax liability for you on any legal precedent I'm aware of, to any state other than TN. But then I'm not a tax professional by any stretch of one's imagination.
