After a brief lull in 2010, when no states enacted an affiliate nexus provision, 2011 saw Arkansas, Connecticut, Illinois, and Vermont all adopt such a law. Meanwhile, California enacted an affiliate nexus law last year only to repeal it after it struck a deal with Amazon in which the law would be revived if a federal solution is not reached by September 2012.
But the political prospects of Congress enacting such a measure are anything but clear.
The general approach to establishing nexus under affiliate nexus laws is based on the online retailer's agreements with in-state residents who refer customers via a web link to the retailer's website. The legislation typically provides that a remote seller must register as a vendor and collect sales tax if it:
Other states, such as Arizona, New Jersey, and Virginia have legislation pending that would create a presumption of nexus based upon the existence of a distribution center or related entity in the jurisdiction.
Judging from the number of affiliate nexus bills pending in state legislatures, it looks as though additional states will take matters into their own hands by enacting a click-through nexus law in 2012.
States with affiliate nexus bills pending include:
In state legislatures across the country, few bills that are introduced are enacted. But the number of click-through nexus bills pending in the various states could indicate that more jurisdictions are likely to adopt provisions aimed at capturing revenues generated by remote sellers.
This sentiment was echoed by Joe Huddleston, executive director of the Multistate Tax Commission at a recent Bloomberg BNA State Tax Advisory Board meeting. “[B]ecause of the economic crunch, a lot of these states out of an abundance of caution have passed these Amazon-type statues like New York and I think more will,” he said.
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