Kansas Considers Click-Through Nexus Provisions

UPDATE, 5.14.13: SB 84 was struck down, but SB 83, which includes a click-thru nexus provision, was signed into law on April 16. It will take effect July 1, 2013. Read about it: Kansas remote sales tax.

The Kansas Senate Assessment and Taxation Committee has recommended passage of a bill pertaining to click-through nexus.

SB 84:

• Requires any person who sells or leases tangible personal property to the state to "register with the department of revenue as a retailer and … collect and remit sales or use tax on all taxable sales of tangible personal property to customers in this state."
• Nullifies any "ruling, agreement or contracts… between a retailer and this state's executive branch, or any other state agency or department" that allows the retailer to not collect sales and use tax "despite the presence of a warehouse, distribution center or fulfillment center in the state that is owned or operated by the retailer or an affiliated person of the retailer… unless it is specifically approved by a majority vote of each of the chambers of the Kansas legislature."

"Affiliated person" is here defined as "any person that is a member of the same 'controlled group of corporations' as defined in section 1563(a) of the federal internal revenue code... ."

"Retailer doing business in this state" is defined in part as:

• "[A]ny retailer maintaining in this state, permanently, temporarily, directly or indirectly through a subsidiary, agent or representative, an office, distribution house, sales house, warehouse, or other place of business."
• [A]y retailer utilizing an employee, independent contractor, agent, representative, salesperson, canvasser, solicitor, or other person operating int his state either permanently or temporarily, for the purpose of selling, delivering, installing, assembling, servicing, repairing, soliciting, sales or the taking of orders for tangible personal property... ." (Their emphasis).

The second provision of the bill prevents quiet handshakes behind closed doors - the types of agreements that have occurred in the past between some state governments and Amazon.com, where Amazon brings jobs to the state and the state pushes back the start date for tax collection. Such an agreement took place in Indiana, although lawmakers are currently attempting to move the date of tax collection forward by six months.

SB 84 is timely; it coincides with the introduction of Marketplace Fairness Act of 2013 in the United States Senate. Both pertain to sales and use tax and remote sellers.

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