Amazon Nexus Laws Introduced By Everyone???
Okay, not everyone: yet. It seems that every day lately or every other day, another state is introducing "Amazon.com" affiliate nexus legislation, nexus presumption standards and/or notification/reporting requirements.
Last week, Arizona, and Hawaii joined the ranks of Illinois, Mississippi, New Mexico, California and Connecticut. Vermont just joined yesterday. To see the details on all of these, go to Amazon Nexus Runs Wild. South Dakota hasn't proposed "Amazon.com" nexus, but has proposed nexus presumption standards and notification/reporting requirements.
Arizona's Bill (HB 2551) states the following:For the purposes of this section, a person making sales of tangible personal property is presumed to be conducting business in this state if the seller contracts with a resident of this state who, for a commission or other consideration, directly or indirectly refers potential customers to the seller, by an Internet website link or otherwise, if the cumulative gross income or gross proceeds from sales by the seller to customers in this state who are referred to the seller by all residents with that type of an agreement with the seller exceeds ten thousand dollars during the preceding twelve months. This presumption may be rebutted by proof that the resident with whom the seller has an agreement did not engage in any solicitation in this state on the seller's behalf that would satisfy the nexus requirement of the United States constitution during those preceding twelve months.Hawaii's Bill (HB 1183) creates a nexus standard for taxing out-of-state businesses on their business activities in Hawaii. Amends the definition of engaging in business to include local affiliate agreements. Allows out-of-state businesses to file information regarding sales to residents of the State instead of collecting GET. In other words, it imposes similar notification and reporting requirements as Colorado has attempted to do.The "Amazon.com" nexus language in the Hawaii Bill is as follows:The sale of tangible personal property by a person soliciting business through an independent contractor or other representative if the person enters into an agreement with a resident of this State under which the resident, for a commission or other consideration, directly or indirectly refers potential customers, whether by a link on an Internet website or otherwise, to the person. This presumption may be rebutted by proof that the resident with whom the person has an agreement did not engage in any solicitation in the State on behalf of the person that would satisfy the nexus requirement of the United States Constitution during the taxable year in question. South Dakota has introduced two bills. SB 146 seeks to require certain notice requirements for retailers that do not have nexus in South Dakota which are selling tangible personal property, services, or products transferred electronically for use in South Dakota. This is similar to Colorado's notification requirements. SB 147 seeks to impose a nexus presumption standard for retailers in multiple ways; however, there is no "Amazon.com" nexus standard in the bill. The Bill States:A retailer is engaged in the business of selling tangible personal property, services, and products transferred electronically for use in this state if: (1) Both of the following conditions exist:(a) The retailer holds a substantial ownership interest in, or is owned in whole or in substantial part by, a retailer maintaining a place of business within this state; and(b) The retailer sells the same or a substantially similar line of products as the related retailer in this state and does so under the same or a substantially similar business name, or the instate facility or instate employee of the related retailer is used to advertise, promote, or facilitate sales by the retailer to a consumer; or(2) The retailer holds a substantial ownership interest in, or is owned in whole or in substantial part by, a business that maintains a distribution house, sales house, warehouse, or similar place of business in this state that delivers property sold by the retailer to consumers.Any retailer that is part of a controlled group as defined in § 10-45-20.3 and that controlled group has a component member that is a retailer engaged in business in this state as described in this Act, shall be presumed to be a retailer engaged in business in this state. This presumption may be rebutted by evidence that during the calendar year at issue the component member that is a retailer engaged in business in this state did not engage in any of the activities described in this Act on behalf of the retailer. For purposes of this section, the term, component member, means any component member as defined in Section 1563(b) of the Internal Revenue Code as of January 1, 2011.Any retailer making sales of tangible personal property to purchasers in this state by mail, telephone, the Internet, or other media which has a contractual relationship with an entity to provide and perform installation, maintenance, or repair services for the retailer's purchasers within this state shall be included within the definition of retailer under the provisions of this Act.Vermont's bill (HB 143) states:A person making sales that are taxable under this chapter shall be presumed to be soliciting business through an independent contractor, agent, or other representative if the person enters into an agreement with a resident of this state under which the resident, for a commission or other consideration, directly or indirectly refers potential customers, whether by a link on an Internet website or otherwise, to the person if the cumulative gross receipts from sales by the person to customers in the state who are referred to the person by all residents with this type of an agreement with the person are in excess of $10,000.00 during the preceding tax year. The presumption may be rebutted by proof that the resident with whom the person has an agreement did not engage in any solicitation in the state on behalf of the person that would satisfy the nexus requirements of the United States Constitution during the tax year in question. This act shall take effect on July 1, 2011.CONCLUSION
Hopefully this is "clear as mud." In simple terms, if you are an out-of-state retailer that doesn't collect sales tax on sales into any of the states mentioned, then you need to pay attention. More specifically, if you are an out-of-state retailer that is part of controlled group of corporations in a similar line of business, OR you are a remote retailer involved in "affiliate programs," and you don't collect sales tax on sales into the states mentioned, then you need to pay attention.
Currently, New York, Rhode Island and North Carolina have Amazon.com nexus laws. Colorado and Oklahoma have nexus presumption standards for retailers who are component members of controlled groups and meet other requirements. Colorado and Oklahoma also have notification/reporting requirements. Although, Colorado's notification/reporting requirements are currently ON HOLD.Stay tuned, "we've only just begun."
Brian Strahle is the owner of LEVERAGE SALT, LLC where he provides state and local tax technical services to accounting firms, law firms and tax research organizations across the United States. He also writes a weekly column in Tax Analysts State Tax Notes entitled, "The SALT Effect." For more info, visit his website: www.leveragestateandlocaltax.com
You can reach Brian at firstname.lastname@example.org.
Because state and local taxes are deceptively simple and endlessly complicated.