State Tax Commissioner to Exchange Views with Prominent Tax Attorney on Controversial Click-Through Nexus Law

Arlington, VA (June 24, 2011) “They can run but they cannot hide,” said Connecticut’s Commissioner of Revenue Services, Kevin Sullivan, in response to the recent news that the Seattle-based Amazon is the latest online seller to drop its marketing arrangements with Connecticut-based sales associates after the state’s enactment of a click-through nexus statute.

Commissioner Sullivan and prominent state and local tax attorney Art Rosen (who represents some business stakeholders), will exchange viewpoints on questions raised by these laws in a new BNA Tax & Accounting webinar, The Rise of Click-Through Nexus and What It Means to You on June 30^th from 12:30 to 2:00 p.m. ET, will focus on the enactment of so-called “Amazon” or “click-through” nexus laws in Connecticut and other states.

Recent statements by the Commissioner show he believes online remote vendors should have been collecting the state’s sales tax even before the state’s click-through nexus law was enacted.

“Amazon, Overstock and others have had more than enough business presence in Connecticut before the new remote sellers legislation passed this session,” the Commissioner asserted. “And they were also clearly doing business with sufficient state nexus on and after the May 4^th effective date of the new state law.”  Commissioner Sullivan added, “Instead of making a simple and inexpensive adjustment in their automated billing processes, Amazon and the others will do anything to keep competing unfairly and pass tax obligations along to unsuspecting state residents who then have to remit the resulting use tax.”

But some business stakeholders argue that Amazon and other remote online vendors who refuse to collect Connecticut’s sales tax are not hiding. Instead, they are recognizing and utilizing their constitutional protections, says webinar panelist Rosen, a partner with McDermott Will & Emery LLP in New York City.

"It is unfortunate that Connecticut and some other states fail to realize that they cannot force sales tax collection simply because there is a situation they perceive as being ‘unfairly competitive’ or because an entity has a ‘business presence’ in a state,” added Rosen. “The U.S. Constitution still rules and so physical presence − whether through employees, property, or ‘significantly associated with marketing’ representatives − is still the legal requirement.”

In 60-90 minutes, the speakers will cover:

• The theory behind affiliate nexus under the Amazon or click-through nexus laws.
• Why states believe it is fair
• How these laws could impact e-commerce and interstate commerce
• Common elements of the laws:
• What is an agent and how do its activities/does their activity create nexus?
• Annual safe-harbor thresholds
• Rebuttable presumptions
• Key terms and definitions
• Are sales of services and tangible personal property treated similarly?
• Where do we draw the line?
• The distinction between engaging in online solicitation or passive advertising with an in-state associate
• Activities that a state could deem to be “solicitation” (e.g., distributing printed material such as flyers or coupons, initiating phone calls or sending e-mails)
• Activities that a state would likely deem as “passive advertising” (e.g., newspaper ads, maintaining a website that a user visits on his or her own initiative)
• How Connecticut intends to enforce its click-through nexus law, which takes effect July 1.
• Practical planning approaches to consider in order to avoid running afoul of click-through nexus laws.
• What lessons can be learned from similar cases involving other taxes, such as transient occupancy tax decisions for companies like Orbitz, Expedia, etc.

Kevin B. Sullivan, Commissioner for the Connecticut Department of Revenue Services. Appointed by Governor Malloy in 2011 to serve as Connecticut’s Commissioner of Revenue Services, Commissioner Sullivan previously served as Connecticut’s Lieutenant Governor from 2004 to 2007. During this time, he regularly chaired the state’s Finance Advisory Committee and took on an active role in state policy.

Arthur R. Rosen is a partner in the law firm of McDermott Will & Emery LLP and is based in the Firm’s New York office. His practice focuses on tax planning and litigation relating to state and local tax matters for corporations, partnerships and individuals. Formerly the Deputy Counsel of the New York State Department of Taxation and Finance, as well as Counsel to the Governor’s Temporary Sales Tax Commission and Tax Counsel to the New York State Senate Tax Committee, Mr. Rosen has held executive tax management positions at Xerox Corporation and AT&T. In addition, he has worked in accounting and law firms in New York City.

Jim Fier, CPA, (moderator) is a partner at Downey, Smith and Fier, a state and local tax consulting firm in Lakewood, CA.  Prior to joining DSF, Jim served as the National Partner-in-Charge of Sales and Use Tax for Deloitte.  Jim focuses on sales and use and other gross receipt taxes advising clients in various industries, including e-commerce, retail, manufacturing, financial services, etc.  Prior to joining Deloitte, Jim began his career with the Board of Equalization in California, working in its compliance and audit divisions.  Jim holds a Masters of Taxation degree from the University of Southern California and a Bachelor of Science degree from San Diego State University. 

The Rise of Click-Through Nexus and What It Means to Youtakes place June 30, 2011, from 12:30 – 2:00 pm, ET). To register for this webinar or obtain further information about CLE and CPE credits, go to http://www.bna.com/rise-clickthrough-nexus-w12884902108/ or (in the U.S.) call 800.372.1033, menu Option 6, then Option 1. The per-sitefee is $249. 

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