Sales Tax 101

Which States Require Sales Tax Based on Click-Through Nexus?

by Mark Faggiano

Affiliate nexus states

Last updated August 22, 2016

In a recent post we covered click-through nexus and what it means for small business owners everywhere. In short, it’s another in a series of tax headaches that eCommerce sellers have to deal with as states try to collect revenue. Rather than taxing businesses due to physical nexus in a state, states are collecting money from businesses who have affiliates in other states.

But not every state has required businesses to pay taxes on click-through nexus. As with sales tax, there’s no federal rule regarding click-through nexus. Judicial rulings in various states mean that some states are allowed to declare that sellers are on the hook for sales tax if the have click-through nexus, while others are not. Illinois is the latest state to fail to institute click-through nexus (link opens in PDF).  In fact, the Illinois Supreme Court turned down the provision because it was “unfair to Internet retailers.”

We thought it would be helpful for you and other small business owners to have a list of states that currently tax sellers with click-thru nexus. Hopefully this list helps you run your business more smoothly moving forward.

States That Have Enacted Click-Thru Nexus Provisions

Below are the states that have started their own program. Along with the state, you’ll find information on what the threshold is for the affiliate program/marketing program. Until you hit this, you shouldn’t have to worry about complying with the sales tax on click-through in the state unless you otherwise have nexus in the state. For example, if the threshold is $10,000, you must hit $10,000 worth of sales in that state for the nexus to affect you.

Of course, these laws change constantly, so please consult your accountant should you have any questions.

Also included is whether the provision is rebuttable (if you can prove you don’t need to pay, you’re good) or irrebuttable (it’s impossible to turn over the state’s law no matter how strong the evidence is) presumption.

Arkansas

Threshold: More than $10,000 during the preceding 12 months.

Arkansas has a rebuttable presumption.

Click here for more about who should register for a sales tax permit in Arkansas.

California

Threshold: More than $10,000 and more than $1 million in annual in-state sales.

California has a rebuttable presumption.

Click here for more about who should register for a sales tax permit in California.

Connecticut

Threshold: More than $2,000 during the preceding four quarterly periods.

Connecticut has an irrebuttable presumption.

Click here for more about who should register for a sales tax permit in Connecticut.

Georgia

Threshold: More than $50,000 in the preceding 12 months.

Georgia has a rebuttable presumption.

Click here for more about who should register for a sales tax permit in Georgia.

Kansas

Threshold: More than $10,000 during the preceding 12 months.

Kansas has a rebuttable presumption.

Click here for more about who should register for a sales tax permit in Kansas.

Louisiana

(Goes into affect April 1, 2016)

Threshold: More than $50,000 during the preceding twelve months.

Louisiana has rebuttable presumption.

Click here for more about who should register for a sales tax permit in Louisiana.

Maine

Threshold: More than $10,000 during the preceding year.

Maine has a rebuttable presumption.

Click here for more about who should register for a sales tax permit in Maine.

Michigan

Threshold: More than $10,000 during the immediately preceding 12 months.

Michigan has rebuttable presumption.

Click here for more about who should register for a sales tax permit in Michigan.

Minnesota

Threshold: More than $10,000 in the 12-month period ending on the last day of the most recent calendar quarter before the calendar quarter.

Minnesota has a rebuttable presumption.

Click here for more about who should register for a sales tax permit in Minnesota.

Missouri

Threshold: More than $10,000 in the preceding 12 months.

Missouri has a rebuttable presumption.

Click here for more about who should register for a sales tax permit in Missouri.

Nevada

Threshold: More than $10,000 in the preceding quarterly four periods.

Nevada has rebuttable presumption.

Click here for more about who should register for a sales tax permit in Nevada.

New Jersey

Threshold: More than $10,000 in the prior four quarterly periods.

New Jersey has rebuttable presumption.

Click here for more about who should register for a sales tax permit in New Jersey.

New York

Threshold: More than $10,000.

New York has a rebuttable presumption.

Click here for more about who should register for a sales tax permit in New York.

North Carolina

Threshold: More than $10,000 during the preceding four quarterly periods.

North Carolina has a rebuttable presumption.

Click here for more about who should register for a sales tax permit in North Carolina.

Ohio

Threshold: More than $10,000 during the preceding calendar year.

Ohio has rebuttable presumption.

Click here for more about who should register for a sales tax permit in Ohio.

Pennsylvania

Threshold: There is no threshold specified, so assume you owe sales tax if you have click-thru nexus.

Pennsylvania has no presumption on the books.

Click here for more about who should register for a sales tax permit in Pennsylvania.

Rhode Island

Threshold: More than $5,000 during the four preceding quarterly periods.

Rhode Island has a rebuttable presumption.

Click here for more about who should register for a sales tax permit in Rhode Island.

Tennessee

Threshold: More than $10,000 during the preceding 12 months.

Tennessee has a rebuttable presumption.

Click here for more about who should register for a sales tax permit in Tennessee.

Vermont

(Begins December 1, 2015)

Threshold: More than $10,000 in the preceding tax year.

Vermont has a rebuttable presumption.

Click here for more about who should register for a sales tax permit in Vermont.

Washington

Threshold: More than $10,000 in the preceding tax year.

Washington has rebuttable presumption.

Click here for more about who should register for a sales tax permit in Washington.

As you can see, the laws are different for every state and require you to keep up with your records. On top of that, some states don’t even give you the opportunity to try and prove you don’t have nexus in that state and therefore don’t owe sales tax.

Think it’s unfair? Still confused on how it works? Comment below to voice your opinion!

  • Cooper12

    Hi, thanks for the informative post. I hope you can keep this updated as more states are added and other laws are changed.

    One thing in your post I dont understand is this sentence: “Illinois is the latest state to try and fail to institute click-through nexus”

    How did IL try and fail? Does this mean they were successful in implementing the click-through?

    thanks again and I look forward to your reply.

    • Hi-

      Perhaps you missed it but the very next sentence says “In fact, the Illinois Supreme Court turned down the provision because it was “unfair to Internet retailers.”

  • Hey Mark – I’ve been doing a bit of research on the click through nexus/affiliate laws and this post is perhaps the most comprehensive – thank you!! I was wondering if you had any recommendations on where to look for the current and most up to date info on all the states as you have here with each state and their thresholds?

    • This is a really good question and unfortunately, as with many things sales tax, your best answer is each individual state’s department of revenue. I know that means look in 46 places rather than one place. That said, I’ll put this post on my list to update very soon, too. Have a look for it around the end of March/early April.

      • Hey Mark – Thank would be AWESOME! Thanks so much – I’m looking forward to it 🙂 I had a feeling it would have to be a state-by-state lookup – I assume the info is on the state’s website but do you have a go-to area where this info usually lives?

  • Alison Chew

    Hi Mark,
    Any word on West Virginia?

    Thanks!

    • Hi Alison, As far as we can tell, West Virginia doesn’t have click-through nexus. They did, in 2013, broaden their definition of nexus, a news item about which can be found here: http://www.ttrus.com/West-Virginia-and-Kansas-Enact-Affiliate-Nexus-Statutes-i294.html

      (But this doesn’t include anything about click-through nexus!)

      • Alison Chew

        Hi Mark,

        It would be helpful if you could add the date that the law went into effect as well as a direct link to the legislation. In addition, any word on South Dakota, North Dakota, NM, AZ, IA, OK and DC as it pertains to click-through Nexus policy? Something went into effect on 11/5/15, do you know what? Thanks so much!

      • Alison Chew

        Hi Mark,

        It would be helpful if you could add the date that the law went into effect as well as a direct link to the legislation. In addition, any word on South Dakota, North Dakota, NM, AZ, IA, OK and DC as it pertains to click-through Nexus policy? Something went into effect on 11/5/15, do you know what? Thanks so much!

  • Will Hillock

    As far as you know, have any states enacted click through nexus for state corporate income tax purposes, or just sales tax purposes?

    • This is a great question but I wouldn’t feel qualified to answer it. I personally haven’t come across that, but in talking to TaxJar customers we see all kinds of scenarios when it comes to sales tax nexus leading to income tax nexus (or not). It might be a good idea to consult a tax pro. Here’s a vetted list: http://www.taxjar.com/sales-tax-accountant-directory/

  • Kate M.

    Should Colorado be on this list? Or maybe I don’t understand how to read their statutes. Truth be told, reading that kind of stuff makes me want to take a nap…Thanks in advance

    • From our latest reading, the Colorado click-thru nexus law is still up for debate. But we’ll post here if that changes!

  • Rauff

    New York state

  • Ryan Geldermann

    Hi, I run a wedding videography company out of MD. I have an independent contractor who shoots weddings for me in CA then sends me the footage and the final DVDs are sent to the CA client from MD. Do I have nexus in CA due to the independent contractor being there?

  • Pingback: Sales Tax by State: Sales Tax on Services 101()

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