IMPORTANT UPDATE: Since the original publication of this post, SO MUCH has happened in the area of sales tax. The most significant being the U.S. Supreme Court’s decision in South Dakota v. Wayfair, which overturned the long established physical presence standard. The Amazon and other nexus expanding laws described in this post focused on states finding ways to stretch their laws but yet still comply with Quill. After the Wayfair decision, states were free to enact laws which did not require a physical presence in their state. Therefore, laws such as the famous “click-through nexus” have become less significant. (For an comprehensive update on which states have adopted economic nexus, see my most updated chart on which states that have enacted Economic Nexus Laws, available for download at this link: States with Economic Nexus Las as of January 1, 2019.)
It seems every day we hear about one state or another enacting some type of legislation aimed at requiring out-of-state online retailers to collect tax on sales to customers in states enacting these laws. This seeming flurry of state expanding nexus laws isn’t just imaginary – it’s really happening!
It seems every day we hear about one state or another enacting some type of legislation aimed at requiring out-of-state online retailers to collect tax on sales to customers in states enacting these laws. This seeming flurry of state expanding nexus laws isn’t just imaginary – it’s really happening!
Without a doubt, states have been fueled by their frustration at our U.S. Congress’s inability to pass federal remote seller legislation, energized by states that are willing to blatantly defy the Quill standard by adopting an economic nexus standard for sales tax, and encouraged by the U.S. Supreme Court’s recent decision to “bless” Colorado’s notification and reporting law.
So today I’m blogging on which states have enacted some type of nexus expanding law, notification and reporting law, or that have enacted or adopted an economic nexus standard for sales tax. I’ve chosen to summarize this by- state summary in an easy to view chart. At the end of the chart, you’ll find a brief description of the various types of provisions and other relevant information plus some example on how they apply.
So, without further ado, following is a chart which shows as of March 1, 2017, the states that have enacted a nexus expanding or other provisions aimed at online remote retailers, the type of provision enacted, and other relevant information. (Also see my important updated at the beginning of this post).
Note that the provisions falls into five different categories:
- Click-through,
- Affiliate (Related Party),
- Notification Only,
- Notification & Reporting
- Economic Nexus.
Amazon and Other “Nexus Expanding” Laws – By State Summary (3/1/2017) (See the end of the chart for notes and descriptions of each type of provision).
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STATE
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YEAR ENACTED (Effective Date in Parenthesis)
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CITATION OR LEGISLATIVE BILL
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TYPE OF NEXUS PROVISION (See Notes at the End of Chart for an Explanation of Each Type Provision)
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Alabama
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2015 (Jan 1, 2016)
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Alabama (Reg. 810-6-2-.90.03)
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Economic Nexus (adopted via Regulation). (AL sales > $250K plus engaging in specific activities. Also see this post for more on Alabama’s Economic Nexus provision.
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Arkansas
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2011 (Oct 24, 2011)
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Ark. Code Ann. §26-52-117(d)-(e); Ark. Code Ann. §26-52-117(b)(1)-(5)
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Click-through, ($10,000) [Note A]
Affiliate (related party) [Note B]
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California
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2011 (Sept 15, 2012)
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Cal. Rev. & Tax Code §6203(b)(5)(A); Cal. Rev. & Tax Code §6203(c)(4)
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Click-through ($10,000; $1,000,000) [Note A]
Affiliate (related party) [Note B].
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Colorado
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N& R enacted 2010 (July 1, 2017)
Affiliate Nexus enacted 2014 (July 1, 2014)
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Colo. Rev. Stat. §39-21-112(3.5)
Colo. Rev. Stat. §39-26-102(3)(d)(I)(A)-(E)
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Notification & Reporting [see Note D for the significance of the US Supreme Court’s final action]
Affiliate (related party) [Note B]
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Connecticut
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2011 (July 1, 2011)
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Conn. Gen. Stat. §12-407(a)(12)(L); Conn. Gen. Stat. §12-407(a)(15)(A)(vi)
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Click-through ($2,000) [Note A]
Affiliate (related party) [Note B]
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Georgia
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2012 (Oct 1, 2012)
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Ga. Code Ann. §48-8-2(8)(M); Ga. Code Ann. §48-8-2(8)(K), (L)
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Click-through ($50,000) [Note A]
Affiliate (related party) [Note B]
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Illinois
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First enacted in 2011 (July 1, 2011); revised version enacted 2014 (Jan 1, 2015)
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35 Ill. Comp. Stat. 105/2 & 110/2
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Click-through ($10,000) [Note A]
Challenged and held to be preempted by the Federal Internet Tax Freedom Act. Revised version enacted in 2014 with effective date of Jan 1 2015)
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Kansas
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2013 (July 1, 2013)
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Kan. Stat. Ann. §79-3702(h)(2)(A)-(C)
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Click-through ($10,000) [Note A]
Affiliate (related party) [Note B]
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Louisiana
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2016 (March 14, 2016)
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H.B. 30, 2016 1st Extra. Sess. (La. 2016)
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Click-through ($10,000) [Note A]
Affiliate (related party) [Note B]
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Maine
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2013 (Sept 17, 2013)
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Me. Rev. Stat. Ann. tit. 36, §1754-B(1-A)(A)-(B); Me. Rev. Stat. Ann. tit. 36, §1754-B(1-A)(C)
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Click-through ($10,000) [Note A]
Affiliate (related party) [Note B]
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Michigan
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2015 (Oct 1, 2015)
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Mich. Comp. Laws §205.52b(3); Mich. Comp. Laws §205.52b(1)
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Click-through ($10,000; $50,000) [Note A]
Affiliate (related party) [Note B]
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Minnesota
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2013 (July 1, 2013)
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Minn. Stat. §297A.66(4a); Minn. Stat. §297A.66(4)(a)(a)-(2)
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Click-through ($10,000) [Note A]
Affiliate (related party) [Note B]
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Missouri
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2013 (Aug 28, 2013)
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Mo. Rev. Stat. §144.605(2)(e).
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Click-through ($10,000) [Note A]
Affiliate (related party) [Note B]
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Nevada
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2015 (click-through effective Oct 1, 2015; affiliate nexus effective July 1, 2015)
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2015 Nev. A.B. 380
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Click-through ($10,000) [Note A]
Affiliate (related party) [Note B]
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New Jersey
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2014 (July 1, 2014)
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N.J.S.A. 54:32B-2(i)(1)
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Click-through ($10,000) [Note A]
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New York
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2008 (June 1, 2008)
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N.Y. Tax Law §1101(b)(8)(vi)
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Click-through ($10,000) [Note A]
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North Carolina
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2009 (Aug 7, 2009)
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N.C. Gen. Stat.§105.164.8(b)(3)
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Click-through ($10,000) [Note A]
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Ohio
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2015 (July 1, 2015)
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Ohio Rev. Code Ann. §5741.01(I)(2)(g); Ohio Rev Code Ann. §5741.01(I)(2)(a)-(f)
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Click-through ($10,000) [Note A]
Affiliate (related party) [Note B]
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Oklahoma
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Notification – 2010 (July 1, 2010)
Expanded version N&R – 2016 (Nov 1, 2016)
Affiliate Nexus – 2016 (Nov 1, 2016)
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Okla. Stat. Ann. tit. 68, §1406.1
Okla. Stat. Ann. tit. 68, §1406.2(A)
2016 Okla. H.B. 2531, §3
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Notification only enacted in 2010 [Note C]
Notification & Reporting (law amended in 2016 to include requirement to send direct and specific notification to Oklahoma purchasers)
Affiliate (related party) [Note B
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Pennsylvania
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2011 (Sept 1, 2012)
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Penn. Dept. of Rev., Sales and Use Tax Bulletin 2011-01
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Click-through (no threshold)
Affiliate Nexus (related party)
No enacting legislation, both adopted through administrative guidance – Bulletin 2011-01 clarified that activities such as engaging in-state marketing affiliates create nexus
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Rhode Island
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2009 (July 1, 2009)
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R.I. Gen. Laws §44-18-15(a)(2);
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Click-through ($5,000) [Note A]
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South Dakota
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Notification – 2011 (March 11, 2011)
Economic Nexus – 2016 (May 1, 2017)
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S.D. Codified Laws Ann. §10-63-2
S.B. 106, Laws 2016, § 1
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Notification [Note C]
Economic Nexus (SD sales > $100K or 200+SD transactions). Also see this post for more on South Dakota’s Economic Nexus provision. (Important Development: On 3/6/2017, the SD 6th Judicial Court ruled that South Dakota’s economic nexus legislation is unconstitutional.)
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Tennessee
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Click-through – 2015 (July 1, 2015)
Economic nexus – 2016 (Jan 1, 2017)
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2015 Tenn. H.B. 644
TN Rule 1320-06-01-.129
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Click-through ($10,000) [Note A]
Economic Nexus (adopted via Regulation) (TN sales > $500K and regular/systematic solicitation. Also see this post about Tennessee’s Economic Nexus provision
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Texas
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2011 (Jan 1, 2012)
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Tex. Tax Code Ann. §151.107(a)(3) & Tex. Tax Code Ann. §151.107(a)(8
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Affiliate (related party) [Note B]
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Vermont
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Click-through – 2011 (Dec 1, 2015),
Economic Nexus and Notification enacted 2016 (July 1, 2017 – but see comment)
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Vt. Stat. tit. 32, § 9701(9)(I); Vt. Stat. Ann. tit. 32, §9783(b)-(c)
Vermont H.B. 873
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Click-through [Note A}
Economic Nexus (VT sales > $100K or 200+ VT transactions) (not effective until the later of July 1, 2017 or the Quill physical presence requirement is abolished)
Notification [Note C]
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Virginia
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2012 (Sept 1, 2013)
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Va. Code Ann. §58.1-612
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Affiliate Nexus (related party) [Note B]
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Washington
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2015 (Sept 1, 2015)
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Wash, Rev, Code §82.08.052(1)
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Click-through ($10,000) [Note A]
Economic Nexus (for Wholesale Sales)
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Wyoming
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2017 (July 1, 2017)
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H.B. 119; Wyo. Stat. Ann. § 39-15-501(a)
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Economic Nexus (WY sales > $100K or 200+ WY transactions)
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The following notes provide a brief description of the various type of provisions so that readers have a general idea of the provisions while reviewing the chart above.
Note A: Click-through nexus is what many people think of when they hear the term “Amazon Law.” These laws say that a presumption of nexus is created when an out-of-state retailer contracts with in-state marketing affiliates – businesses or individuals who post web-links on their in-state website that refer their visitors to the online store of the internet retailer with whom they contract and that are compensated by commission or otherwise for referred sales. All states that have click- through nexus laws generally have a “referred sales” revenue threshold that must be exceeded in order for the nexus presumption to apply. You may have noticed that $10,000 appears in parenthesis after “Click-through” in most of the states above. This means that the amount of referred sales that originate from weblinks on the in-state marketing affiliates’ websites must exceed $10,000 combined. As an example, lets say an out-of-state online retailer has 3 in-state marketing affiliates each with a link on their website that lead to the out-of-state retailer’s store. Now let’s say that in the prior year, visitors to the 3 marketing affiliates websites ended up making total purchases of $12,000 at the online retailer’s store. in this example, the out-of-state retailer would be presumed to have nexus in the state with the click-through nexus law. It’s easy to see from this example, that click-through nexus doesn’t just impact the large mega online retailers.
Note B: Many states have what is referred to as affiliate (related party) nexus provision. Affiliate nexus laws attribute nexus to an out-of-state retailer with a corporate affiliate, such as a parent or subsidiary company, operating in the state and engaging in the type of activity that the state law says creates affiliate nexus. An affiliate nexus provision might say that the out-of-state retailer is presumed to have nexus in the state if the remote retailer’s corporate affiliate engages in activities that benefit the out-of-state retailer, such as providing fulfillment or repair services for property sold by the out-of-state retailer, or where the in-state corporate affiliate uses the same or similar trademarks or tradenames in the state as the out-of-state retailer, The affiliate nexus laws usually require that the in-state and out-of-state companies have some ownership connection.
Note C: Notification and Notification & Reporting laws impose requirements on out-of-state retailers who do not meet the state’s nexus threshold. Since these non-nexus retailers are not required to collect and remit the state’s sales or use tax, the state imposes other requirements on the out-of-state retailer that aim to increase the awareness of and compliance with a states use tax laws such as by requiring out-of-state retailers to notify their in-state customers of their requirement to pay use tax and requiring the out-of-state retailer to submit certain information to the state taxing agency.
Note D: Colorado’s Notification & Reporting law was originally enacted in 2010 – but was almost immediately challenged as unconstitutional by the Direct Marketing Association. After making its way up and down and across the court system over a six year period, on December 12, 2016, the U.S. Supreme Court denied cert to the DMA’s petition and the Colorado Department of Revenue’s conditional cross-petition for writ of certiorari. This final inaction by the U.S. Supreme Court meant that the 10th Circuit Court’s prior decision affirming the constitutionality of Colorado’s notification and reporting law was allowed to stand. The Colorado Department of Revenue recently announced that that its Notification & Reporting law would finally go into effect on July 1, 2017.
There you have it! A summary as of March 1st of the states that have enacted nexus expanding, notification and reporting and economic nexus laws. The list, I guarantee you, is sure to increase. I’ll continue the series with a more detailed look at each of provision, and an update on proposals under consideration by state legislatures in 2017.
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This post was originally published on SalesTaxSupport* and is now available here at The State & Local Tax ‘Buzz’ Blog. This is one of several posts on Internet Sales Tax and Economic Nexus here at The State and Local Tax ‘Buzz’ Blog.
About the Author: Sylvia F. Dion, CPA is the Founder and Managing Partner of PrietoDion Consulting Partners LLC, a State & Local Tax (SALT) Consulting firm providing comprehensive tax services to U.S. and International businesses. Sylvia’s 25 years of multi-faceted tax experience includes holding leadership positions with some of the highest regarded international accounting firms and providing SALT services to companies around the world. From 2011 through 2019, Sylvia also served as a contributor to the SalesTaxSupport* blogs, where she blogged on Internet Sales Tax and Economic Nexus, U.S. Sales Tax for Foreign Sellers and Massachusetts Sales Tax. Sylvia is also a speaker and author whose articles have been published by Bloomberg BNA and in other leading professional tax journals and is the author of “Minding Massachusetts,” a quarterly column published by Tax Analysts’ State Tax Notes. Sylvia is also fluent in Spanish. For more about Sylvia visit the her firm website at www.prietodiontax.com or www.sylviadioncpa.com. You can follow Sylvia on twitter and on Google+ and can contact Sylvia via e-mail at sylviadion@prietodiontax.com
*SalesTaxSupport was formerly a sales tax resource website which closed on March 1, 2019. Many of Sylvia’s posts previously published on SalesTaxSupport have been republished here at “The State and Local Tax ‘Buzz’ Blog.
