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Will Your Advertising Efforts Trigger Nexus?

  • Jun 20, 2016 | Suzanne Kearns

If you’re like most ecommerce owners, you rely on advertising to get the word out about your products or services. But what you may not know is that some states have passed laws that make advertising in the state a trigger for sales tax nexus.

As you likely know, many states are expanding the definition of nexus, and some sellers are finding themselves with nexus in states because they’ve performed activities that in the past never would have triggered nexus. For example, some states now require sellers to collect and remit sales tax if they pay a certain amount in commissions to a state resident, or if their independent contractor performs certain duties on their behalf.

In order to stay in sales tax compliance, it’s important to understand the laws in every state you do business in. That’s why you need to know the laws some states have enacted that tie nexus to advertising. Here are some examples of states that have expanded their nexus definition to include advertisements.

  • California: In this state, the law says that advertising via television, radio, print, the internet, or any other medium won’t trigger nexus for an out-of-state seller unless the advertisement is paid for with commissions from the sales of personal tangible property that results from the advertising.
  • Florida: In 2014, a court case established substantial nexus for a seller in the state of Florida because it 1) advertised systematically to residents of the state in a local magazine, and 2) it accepted orders from Florida residents for product that was to be delivered to them in the state. The combination of these two factors triggers nexus in the Sunshine State.
  • Virginia: According to the Code of Virginia, if you advertise in this state by way of newspapers or other periodicals published and printed within the Commonwealth, or advertise on posters or billboards located in the Commonwealth, or on materials that are distributed in the Commonwealth, you have nexus and are required to collect and remit sales tax.
  • Utah: According to the Utah tax code, if you solicit business in the state via a remote method such as the phone, Internet, direct mail, or email, it will not trigger nexus in the state. But if you physically solicit business from Utah consumers, it will.
  • Texas: According to the Texas tax code, if you engage in regular or systematic solicitation of sales of taxable items in the Lone Star State by way of catalogs, magazines, flyers, radio, television, mail, telephone, computer, cable, optic or any other means, you have nexus in Texas.

As if nexus isn’t confusing enough, now you have to worry about your advertising efforts triggering nexus in the states in which you sell. And just like with all nexus issues, each state has its own rules.

But most of them follow the general rule that if the advertising is remote, it will not trigger nexus. Of course, there are exceptions to that, like California and Texas, so it’s wise to know the law in the states where you do business.

Check out our State Sales Tax Guides that detail each state’s nexus requirements. Or if you want to talk to the Department of Revenue in certain states.

However you go about it, determining the advertising nexus laws in the states in which you sell is important to ensure you stay in sales tax compliance.

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.
Avalara Author
Suzanne Kearns
Avalara Author Suzanne Kearns