Avalara > Blog > Sales and Use Tax > Ohio may adopt economic nexus, eliminate click-through nexus and cookie nexus

Ohio may adopt economic nexus, eliminate click-through nexus and cookie nexus


Ohio currently requires out-of-state sellers to obtain a vendor’s license then collect and remit Ohio sales tax if they have click-through nexus or cookie nexus, which are like economic nexus with a twist. If House Bill 166 is enacted, it will repeal click-through nexus and cookie nexus and will establish a bona fide economic nexus policy in the Buckeye State. It would also impose a sales tax collection obligation on marketplace facilitators.

Click-through nexus

Click-through nexus was adopted in Ohio in 2015. At the time, all states were prohibited from imposing a sales tax collection obligation on businesses with no physical presence in the state (remote sellers).

Generally, remote sellers establish a physical connection to a state through referrals from in-state entities under click-through nexus. Ohio’s click-through nexus law imposes a sales tax collection obligation on remote sellers whose gross receipts from such referrals were in excess of $10,000 during the preceding 12 months.

Despite being adopted by than 20 states, click-through nexus laws generally haven’t been widely enforced due to the physical presence rule. 

Cookie nexus

Seeking other ways to increase sales tax collections from remote sellers, a handful of states came up with cookie nexus. These laws hold that remote sellers establish a physical presence in a state through their use of in-state software. It’s less delicious than it sounds. The term comes from the files that internet websites place on our computers: web cookies.

Ohio adopted cookie nexus in 2017, but it’s unclear to what extent the Ohio Department of Taxation has enforced it. The law was challenged and when the case was eventually dismissed early this year, the plaintiff praised the department for showing “laudable restraint in not seeking to enforce economic or virtual nexus theories against remote sellers … ”

Iowa, Massachusetts, and Rhode Island also have cookie nexus laws on the books, and in Massachusetts, at least, it’s being enforced.

Economic nexus

Click-through and cookie nexus emerged in response to the physical presence restriction; economic nexus brought it down.

Heavily dependent on sales tax revenue, South Dakota challenged the physical presence rule and the case made it all the way to the Supreme Court of the United States. On June 21, 2018, the Supreme Court ruled in favor of the state in South Dakota v. Wayfair, Inc. It overruled the physical presence rule, finding “virtual and economic contacts” between remote sellers and the state to be a sufficient basis for nexus.

To be clear, having a physical presence in a state still establishes a sales tax collection obligation (nexus). However, physical presence is no longer the only way to establish sales tax nexus.

More than 40 states have enacted economic nexus since the Wayfair ruling. Ohio may soon do the same. If HB 166 is adopted, remote sellers with gross receipts in excess of $100,000 in the current or preceding calendar year from the sale of tangible personal property for delivery in Ohio will be required to obtain a vendor’s license and commence collection and remittance of Ohio sales tax.

Collection requirement for marketplace facilitators

HB 166 would also impose a sales tax collection obligation on marketplace facilitators.

The measure presumes a marketplace facilitator to have substantial nexus with the state if, in the current or previous calendar year, it has either:

  • Aggregate gross receipts exceeding $100,000 from sales of tangible personal property delivered into Ohio; or
  • At least 200 separate transactions selling tangible personal property for delivery into Ohio.

When calculating the threshold, a marketplace should include all sales made through the platform, its own and those made on behalf of third-party sellers.

Additional details regarding the proposed changes in Ohio are available in the text of HB 166 (pages 2465ff).

If you’re finding it increasingly difficult to keep up with changing requirements for remote sellers, you’re not alone. Avalara’s new resource page, Sales tax laws by state, can help keep you informed. Our sales tax automation software can help keep you sales tax compliant.


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
Gail Cole
Avalara Author Gail Cole
Gail Cole began researching and writing about sales tax for Avalara 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.