Pinterest and Shopify recently announced “Buyable Pins.” Instead of merely browsing, liking and repinning products, Pinterest users will now see on some favorites a “buy button” where they can purchase the item directly from their pin boards.
My first thought upon seeing this was, “Very cool! Smart move, guys.” And my second though, since I live and breathe sales tax every day, was “But what about sales tax?”
We dug around to try and determine whether or not Pinterest Buyable Pins would add to your sales tax complexity if you elect to use them. But first…
What are Pinterest Buyable Pins?
Pretty soon your pinboards won’t be just for pinning and wishing. If you spot a pin with a blue price on it, you can click it and immediately add it to your shopping cart!
For sellers, of course, this means stripping away a whole layer of complexity between you and your customers. When before customers had to see your item, like or pin it and maybe take the time to follow the link to your website, they can now initiate the buying process directly from Pinterest.
But not so fast! Pinterest Buyable Pins are available to sellers who use the Shopify shopping cart only. If you use another shopping cart, you’ll have to wait, or open a Shopify store. Some other geographic and payments-related restrictions also apply. Shopify put together an excellent Q&A about Pinterest Buyable Pins.
You can also click here for an excellent Q&A about Pinterest Buyable Pins.
What do Pinterest Buyable Pins Mean for Sales Tax?
The good news: Pinterest Buyable pins won’t add to your sales tax complexity!
The reason that Pinterest Buyable pins might have caused sales tax complexity is due to the concept of “click-through” nexus.
Let’s say you sell novelty coffee mugs out of your home in New York and don’t have any other business activities in any other states. You would have sales tax nexus in New York only. Since, as of now, online sellers only have to collect sales tax in states where they have sales tax nexus, then your sales tax life is pretty simple.
But say that the world’s most famous coffee blogger wanted to link to your website in exchange for a small percentage of the profits of every coffee mug sale they send your way. That coffee blogger lives in California. Since California has “click-through nexus,” the presence of that 3rd party affiliate, the coffee blogger, in California means that you now have sales tax nexus in California and are required to collect sales tax from buyers in California.
If Pinterest and Shopify’s agreement had been like a 3rd party affiliate agreement, where one party (ex: Pinterest) gets any kind of “consideration” (ex: a percentage of the sale) due to the relationship, then this would potentially caused sellers who use Pinterest Buyable Pins a sales tax nexus headache.
Fortunately, this link states that Pinterest isn’t “taking a cut” of the proceeds from Pinterest Buyable Pins.
Now, should this ever change, then it might create sales tax nexus for online sellers who choose to use Pinterest Buyable Pins. While we hope you never have to deal with such a complex scenario, we’ll monitor the situation, and other click-through nexus situations, and update you about any changes here at the TaxJar blog.
Click here for more about click-through nexus.
Click here for a list of states with click-through nexus provisions.
Or start the conversation in the comments!