Ohio affiliate and click-through nexus
- Internet sales tax
- Aug 12, 2016 | Gail Cole
Out-of-state sellers may be required to collect and remit Ohio sales and use tax under the state’s affiliate and click-through nexus policies, which have been in effect since July 1, 2015.
Affiliate nexus is triggered in Ohio when an out-of-state seller:
- Uses an office, storage facility, or similar place of business in Ohio, whether operated by the seller or any other person, other than a common carrier acting in its capacity as a common carrier;
- Regularly uses employees, agents, representatives, solicitors, installers, repair people, sales people, or other individuals in Ohio for the purpose of conducting its business;
- Has the same or a similar industry classification or trademarks, service marks, or trade names as an in-state business;
- Uses any person (other than a common carrier) in Ohio to:
- Receive or process orders
- Advertise, promote, or facilitate sales by the seller to customers
- Deliver, install, assemble, or perform maintenance services for the seller’s customers
- Facilitate the seller’s delivery of tangible personal property to customers in Ohio by allowing the seller’s customers to pick up property sold by the seller at a place of business;
- Makes regular deliveries of tangible personal property into this state by means other than common carrier;
- Is affiliated with a person that has nexus in Ohio (other than certain safe harbor activities); OR
- Owns tangible personal property that is rented or leased to a consumer in this state, or offers tangible personal property, on approval, to consumers in this state.
Nexus-creating activities include but are not limited to: delivering property sold to customers; installing, maintaining or repairing such property; providing any kind of consulting or technical services; and providing training services.
Click-through nexus is triggered in Ohio when an out-of-state seller:
- Enters into an agreement with one or more Ohio residents, “where the resident receives a commission or other consideration for directly or indirectly referring potential customers to the seller (including by a link on a website, in person communication, telemarketing); AND
- “The cumulative gross receipts from sales to consumers referred to the seller by all such residents exceed $10,000 in the preceding twelve months.”
Business with the state
Any out-of-state seller or its affiliate — even those without affiliate or click-through nexus in Ohio — “must register with the tax commissioner before selling or leasing tangible personal property or services to a state agency.” Registration is required even if the services sold to a state agency are not taxable, and tax returns must be filed for every reporting period, even if a seller has made no sales during a period.
Remote sellers have a right to rebut the presumption of substantial nexus. In addition, sellers who have a filing responsibility under these guidelines but who have not yet registered may request a Voluntary Disclosure Agreement so long as they have not been contacted by the Department of Taxation “with respect to audit or criminal investigation.” Additional information is available in the department information release ST 2001-01, Use Tax Nexus Standards.
The Ohio Department of Taxation notes that the above provisions may be altered by either state or federal laws, “or by decisions of the U.S. Supreme Court, the Ohio Supreme Court, the Ohio Court of Appeals, or the Ohio Board of Tax Appeals.”
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