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Missouri Amazon Tax

  • Jul 9, 2013 | Gail Cole

 Missouri adds affiliate nexus law.

A new law in Missouri clarifies what is meant by the phrase, "Engages in business activities within this state."

Under the law, a vendor is presumed to "engage in business activities within this state" if any person, other than a common carrier… that has substantial nexus with this state" engages in any of the listed activities. The usual suspects make the list: selling a similar line of products as the vendor under a similar name; maintaining a place of business in the state; delivering or providing maintenance services within the state; and generally conducting any activities that help a vendor establish and maintain a market in Missouri.

An affiliate nexus clause is also included. Under this clause, a vendor is presumed to engage in business activities in Missouri if a vendor:

"…enters into an agreement with one or more residents of this state under which the resident, for a commission or other consideration, directly or indirectly refers potential customers, whether by a link on an internet website, an in-person oral presentation, telemarketing, or otherwise, to the vendor, if the cumulative gross receipts from sales by the vendor to customers in the state who are referred to the vendor by all residents with this type of an agreement with the vendor is in excess of ten thousand dollars during the preceding twelve months…."

Affiliate nexus clauses such as these, often called Amazon taxes, target businesses that don't have a physical presence in the state but do have connections to the state in the form of affiliate vendors. Some large online retailers have severed relationships with affiliate vendors in states that expand the definition of nexus to include them. Amazon recently announced it would terminate its affiliate relationships in Minnesota due to such a law. Overstock threatened to pull out of Massachusetts if it imposes online sales tax, and it did sever relationships with New York affiliates when New York added a so-called Amazon tax to the books.

Yet more and more states, like Missouri, are expanding the definition of nexus to include online affiliates. Meanwhile, federal lawmakers are considering the Marketplace Fairness Act of 2013, legislation that would give states the power to tax remote vendors.

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Sales tax rates, rules, and regulations change frequently. Although we hope you'll find this information helpful, this blog is for informational purposes only and does not provide legal or tax advice.
Gail Cole
Avalara Author
Gail Cole
Gail Cole
Avalara Author Gail Cole
Gail began researching and writing about sales tax in 2012 and has been fascinated with it ever since. She has a penchant for uncovering unusual tax facts, and endeavors to make complex sales tax laws more digestible for both experts and laypeople.