Arkansas Enacts Amazon.com Nexus Law!!!!

The Governor of Arkansas has signed an "affiliate nexus" law and "click-through nexus" (or Amazon.com nexus) law into effect as of April 1, 2011 (SB738).  The laws take effect 90 days after enactment.

Affiliate Nexus Law

Under the Affiliate Nexus law, a seller is presumed to be engaged in the business of selling tangible personal property or taxable services for use in the state if an affiliated person is subject to the sales and use tax jurisdiction of the state and the:

  1. Seller sells a similar line of products as the affiliated person and sells the products under the same business name or a similar business name; 
  2. Affiliated person uses its in-state employees or in-state facilities to advertise, promote, or facilitate sales by the seller to consumers; 
  3. Affiliated person maintains an office, distribution facility, warehouse or storage place, or similar place of business to facilitate the delivery of property or services sold by the seller to the seller's business;
  4. Affiliated person uses trademarks, service marks, or trade names in the state that are the same or substantially similar to those used by the seller; or
  5. Affiliated person delivers, installs, assembles, or performs maintenance services for the seller's purchasers within the state.

Opportunity to Rebut Presumption

The presumption may be rebutted by demonstrating that the affiliated person's activities in the state are not significantly associated with the seller's ability to establish or maintain a market in the state for the seller's sales.

"Click-Through Nexus" Law

If there is not an affiliated person with respect to a seller in the state, the seller is presumed to be engaged in the business of selling tangible personal property or taxable services for use in the state if the seller enters into an agreement with one or more residents of the state under which the residents, for a commission or other consideration, directly or indirectly refer potential purchasers, whether by a link on an Internet website or otherwise, to the seller. $10,000 Sales Threshold

However, this nexus presumption only applies if the cumulative gross receipts from sales by the seller to purchasers in the state who are referred to the seller by all residents with an agreement with the seller exceed ten thousand dollars ($10,000) during the preceding twelve (12) months.

Opportunity to Rebut Presumption

The presumption may be rebutted by submitting proof that the residents with whom the seller has an agreement did not engage in any activity within the state that was significantly associated with the seller's ability to establish or maintain the seller's market in the state during the preceding twelve (12) months.

Proof may consist of written statements from all of the residents with whom the seller has an agreement stating that they did not engage in any solicitation in the state on behalf of the seller during the preceding year if the statements were provided and obtained in good faith.

Act 1001 (S.B. 738), Laws 2011, effective 90 days after adjournment of the 2011 Legislature, and as noted

This blog

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 strahle@leveragesalt.com.

Connect with Brian on LinkedIn. Follow Brian on Twitter. Join the Leverage | SALT LinkedIn Group, connect and contribute with your colleagues!  

Because state and local taxes are deceptively simple and endlessly complicated.

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