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24 States with Click-Through Nexus Policies

  • May 7, 2014 | Gail Cole

 A growing number of states are adopting click-through nexus policies to capture sales tax from online sales.

45 states and the District of Columbia have sales tax, and more than half of these jurisdictions have some sort of click-through nexus policy.

A click-through nexus policy requires sales and use tax collection by “out-of-state vendors that compensate residents for sales made via links on their websites.” According to the Bloomberg BNA 2014 Survey of State Tax Departments, 12 states have enacted click-through nexus legislation. An additional 12 states and the District of Columbia have adopted a policy click-through nexus “despite the apparent absence of a law or administrative pronouncement authorizing their jurisdiction to do so.”

12 states with click-through nexus legislation/administrative pronouncement

  • Arkansas, since October 24, 2011;
  • California, since September 15, 2012;
  • Connecticut, since July 1, 2011;
  • Georgia, since October 1, 2012;
  • Kansas, since July 1, 2013;
  • Maine, since October 9, 2013;
  • Minnesota, since July 1, 2013;
  • Missouri, since August 28, 2013;
  • New York, since June 1, 2008;
  • North Carolina, since August 7, 2009;
  • Pennsylvania, since September 1, 2012; and
  • Rhode Island, since July 1, 2009.

Vermont is ready to adopt click-through nexus as soon as similar legislation has been adopted by 15 other states. Illinois adopted click-through nexus legislation, effective July 1, 2011, but a repeal was upheld in court in October 2013.

Most of the states listed above have a rebuttable presumption, meaning a business may fight the state’s claim that it has click-through nexus and must collect sales tax. The onus is on the business to prove that it is not required to collect and remit sales tax.

Connecticut and Illinois have an irrebuttable presumption, meaning the law does not allow a business to rebut the presumption that it must collect and remit sales tax. Pennsylvania has no presumption, rebuttable or irrebutable.

12 states (+ D.C.) with click-through nexus policy

  • Arizona
  • District of Columbia
  • Hawaii
  • Iowa
  • Louisiana
  • Maryland
  • Nevada
  • New Mexico
  • North Dakota
  • South Dakota
  • Tennessee
  • Utah
  • Washington

Online sales tax

The federal government has long considered granting states the right to impose a sales tax collection requirement on out-of-state vendors selling into the state, either through the internet, by phone, or by mail-order. The Marketplace Fairness Act of 2013 (MFA), approved by the Senate one year ago and currently being rewritten by the House, would grant that right to states with simplified sales tax.

MFA has opponents. Lawmakers in Montana, a state without sales tax, have vowed to fight online sales tax legislation. Many small remote sellers worry that an online sales tax would prove too burdensome. Even large retailers like Overstock fight the bill.

Yet there is a great deal of support for such online sales tax legislation, particularly among sales tax states and brick-and-mortar business owners. Online retailer Amazon.com, initially a vocal opponent to internet sales tax, now lobbies on behalf of MFA. One reason for this is that a growing number of states are finding ways to collect sales tax from remote vendors, as with click-through nexus policies.

Many states are tired of waiting for federal lawmakers to act. Michigan considered click-through nexus last year, though it did not move forward on it. Indiana is currently considering it. And in Colorado, where a use tax notification requirement has been held up in courts, the Senate recently passed the Marketplace Fairness and Small Business Protection Act; it would expand sales tax to many remote sales.

Online sales tax isn’t inevitable, but it is expanding. Is your business prepared to collect sales tax in all states where you sell? An automated solution ensures you’re prepared.

Read Bloomberg BNA’s summary of its 2014 Survey of State Tax Departments.

photo credit: alles-schlumpf via photopin cc

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.