Sales Tax Slice: With MFA Stalled, States Supply Own Answers for Remote Sellers

It has been a busy legislative year for sales and use taxes, and it’s not over yet. The House Judiciary Committee has not put the Marketplace Fairness Act (MFA) on its hearing calendar. Meanwhile, the states are continuing to provide their own solutions.

Colorado’s reading of the tea leaves has prompted the state to enact legislation aimed at simplifying the state’s sales tax structure in accordance with the Marketplace Fairness Act pending in Congress. Earlier this week, Iowa  clarified its application of the so-called “physical presence” requirement. Specifically, the state enacted a bill requiring sales and use tax collection by retailers with offices or distribution centers in state that facilitate deliveries, or retailers that conduct activities significantly associated with retailers’ ability to establish and maintain an in-state market for sales.

“Click-through” nexus provisions are catching on in other state legislatures, despite the misgivings of state tax practitioners. Kansas and Maine are among the states enacting such provisions during the 2013 sessions. Maine’s legislation “goes too far” because it targets activities that are not enough to create nexus with the state, Sarah Beard, partner at Pierce Atwood in Portland, Maine, told BBNA’s Christopher Young in a Weekly State Tax Report article.

Even though click-through nexus laws seem to have caught on at the state level, their validity has yet to be determined, Mark Nebergall, president of the Software Finance and Tax Executives Council, told BBNA. The heart of the matter is whether a party is actively soliciting sales or merely advertising. States are trying to get around the nexus requirement, and the issue is for the courts to decide, Nebergall said.

Meanwhile, the MFA in its current form would not do much to settle states’ click-through nexus approaches, added Nebergall. “This does nothing to do away with that uncertainty,” he said. “We haven’t gotten to a point where we see the light.”

The chart below shows the basic details of the click-through nexus laws currently in effect.   

Enacted Click-Through Nexus Laws


Effective Date

Affiliate Threshold


Arkansas (rebuttable presumption)

Oct. 24, 2011

More than $10,000

Ark. Code Ann. § 26-52-117

California (rebuttable presumption

If federal legislation is enacted by 7/31/12 then click-through is effective 1/1/13. If federal legislation is not enacted, then AB 155 is effective 9/15/12.

More than $10,000 (and more than $1 million in annual in-state sales)

Cal. Rev. & Tax. § 6203(c)

Connecticut (irrebutable presumption)

July 1, 2011

More than $2,000

Conn. Gen. Stat. § 12-407(a)(12)(L)

Georgia (rebuttable presumption)

Oct. 1, 2012

More than $50,000

Ga. Stat. Ann. § 48-8-2(8)(K)

Illinois (irrebuttable presumption)

July 1, 2011

More than $10,000

35 ILCS 105/2 and 110/2

Kansas (rebuttable presumption)

July 1, 2013

More than $10,000

Kan. Stat. Ann. 79-3702(C)

Maine (rebuttable presumption)

90 days after legislature adjourns (scheduled to adjourn June 19, 2013)

More than $10,000

Me. Rev. Stat. Ann. § 1754-B(1-A)(C)

New York (rebuttable presumption)

June 1, 2008

More than $10,000

N.Y. Tax Law § 1101(b)(8)(vi)

North Carolina (rebuttable presumption)

Aug. 7, 2009

More than $10,000

N.C. Gen. Stat. § 105-164.8


Sept. 1, 2012

None specified

Tax Bulletin 2011-01; proposed legislation in 2013 (HB 1043)

Rhode Island (rebuttable presumption)

July 1, 2009

More than $5,000

R.I. Gen. Laws § 44-18-15

Vermont (rebuttable presumption)

When adopted in 15 other states

More than $10,000

Vt. Stat. Ann. tit. 32, § 9701(9)(I) (HB 436)

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