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What is Click-Through Nexus?

  • Sales Tax
  • October 30, 2014 | Ryan O'Donnell

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.” Currently, 12 states have enacted click-through nexus legislation (Bloomberg BNA 2014 Survey of State Tax Departments).

With the exception of Connecticut, these states have a rebuttable presumption allowing businesses to fight a state’s claim that it has click-through nexus.

Click-Through Nexus Legislation States

  • Arkansas
  • California
  • Connecticut
  • Georgia
  • Kansas
  • Maine
  • Minnesota
  • Missouri
  • New York
  • North Carolina
  • Pennsylvania
  • Rhode Island
  • Vermont (will adopt as soon as list reaches 15)

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.”

Click-Through Nexus Policy States

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

Click-Through Nexus Example

Sometimes it’s easiest to explain a complex topic with a simple example. Let’s say we own an online store where customers can purchase tangible personal property. We also have an affiliate program that lets other website owners send potential customers to our online store. The affiliate program is such that if a referred visitor purchases a product, a cut of the revenue is sent to the referrer (the affiliate). Guess what? You have likely just created a click-through nexus with your affiliate’s current state.

The Amazon Law

In 2008, the state of New York enacted a law popularly referred to as the “Amazon law.” This law aimed to attach sales tax responsibility based on the click-through nexus. Historically, this was an important event as it marked the first successful attempt to bypass the 1992 Quill Corp v North Dakota ruling. This ruling was the catalyst for eCommerce retailers not having to collect sales tax from out-of-state buyers.


Avalara Author
Ryan O'Donnell
Avalara Author Ryan O'Donnell