United States: Maine Enacts Sales And Use Tax Click-Through Nexus And Affiliate Nexus Provisions

On June 5, Maine Governor Paul LePage approved legislation that implements click-through nexus and affiliate nexus provisions for purposes of the state's sales and use tax.1 The click-through nexus provision creates a presumption of nexus for out-of-state sellers that have an agreement to pay a Maine resident for providing a link to the seller's Web site. The affiliate nexus provision creates a presumption of nexus for out-of-state sellers if an affiliate has a substantial physical presence in the state. Also, the provision creates a presumption of nexus if a person has a substantial physical presence in the state and engages in certain activities for the seller. Further, the legislation amends and clarifies the existing substantial physical presence requirement necessary to subject sellers to Maine sales and use tax. The provisions are effective 90 days after the Maine legislature adjourns.2

Click-Through Nexus

An out-of-state seller is presumed to be engaged in the business of selling tangible personal property or taxable services for use in Maine if the seller enters into an agreement with a person in Maine under which the person, for a commission or other consideration, directly or indirectly refers potential customers, whether by a link on an Internet Web site, by telemarketing, by an in-person presentation or otherwise, to the seller.3 Also, the cumulative gross receipts from retail sales by the seller to customers in Maine who are referred to the seller by all persons with this type of agreement with the seller must exceed $10,000 during the preceding 12 months.4 A seller that meets these requirements must register with the state and collect and remit taxes. However, a person who enters into an agreement with a seller to refer customers by a link on an Internet Web site is not required to register or collect taxes solely because of the existence of the agreement.5

The click-through nexus provision applies to sales made, uses occurring and services rendered on or after the effective date of the legislation regardless of when the seller and the person entered into the agreement.6 However, when calculating the 12-month period for purposes of determining whether the $10,000 threshold has been met, the 12-month period begins one year immediately preceding the seller's registration with the state as a retailer.

Rebuttable Presumption

An out-of-state seller may rebut the presumption of nexus by submitting proof that the person with whom the seller has an agreement did not engage in any activity within Maine that was significantly associated with the seller's ability to establish or maintain the seller's market in Maine during the preceding 12 months.7 The proof may consist of sworn, written statements from all of the persons within Maine with whom the seller has an agreement stating that they did not engage in any solicitation in the state on the seller's behalf during the preceding 12 months.

Affiliate Nexus

The legislation adds a new provision creating a rebuttable presumption that an out-of-state seller is engaged in the business of selling tangible personal property or taxable services for use in Maine and is required to register as a retailer if the seller has an affiliated person with a substantial physical presence in Maine.8 An "affiliated person" means a person that is a member of the same controlled group of corporations as the seller or any other entity that, notwithstanding its form of organization, bears the same ownership relationship to the seller as a corporation that is a member of the same controlled group of corporations.9 The provision adopts the definition of "controlled group of corporations" from IRC Section 1563(a).10

The out-of-state seller also is presumed to have nexus with Maine if any person, other than a person acting in its capacity as a common carrier, has a substantial physical presence in Maine and:

  • Sells a similar line of products as the seller and does so under a business name that is the same or similar to that of the seller;
  • Maintains an office, distribution facility, warehouse or storage place or similar place of business in Maine to facilitate the delivery of property or services sold by the seller to the seller's customers;
  • Uses trademarks, service marks or trade names in Maine that are the same or substantially similar to those used by the seller;
  • Delivers, installs, assembles or performs maintenance services for the seller's customers within Maine;
  • Facilitates the seller's delivery of property to customers in Maine by allowing the seller's customers to pick up property sold by the seller at an office, distribution facility, warehouse, storage place or similar place of business maintained by the person in Maine; or
  • Conducts any activities in Maine that are significantly associated with the seller's ability to establish and maintain a market in Maine for the seller's sales.11

Rebuttable Presumption

An out-of-state seller can rebut the nexus presumption by demonstrating that the person's activities in Maine are not significantly associated with the seller's ability to establish or maintain a market in Maine for the seller's sales.

Substantial Physical Presence Amended

Maine is one of the few states that has enacted statutory guidance concerning the meaning of the term "substantial physical presence." The legislation amends and clarifies this substantial physical presence requirement. Under existing law, Maine imposes a sales tax collection requirement on every seller of tangible personal property or taxable services that has a substantial physical presence in Maine sufficient to satisfy the Due Process Clause and Commerce Clause of the U.S. Constitution.12 Existing law also provides a list of activities that do not constitute a substantial physical presence such as: (i) soliciting business in the state through catalogs, flyers, telephone or electronic media when delivery of ordered goods is by the U.S. mail or an intermediate third-party common carrier; (ii) attending trade shows, seminars or conventions in the state; (iii) holding a meeting of a corporate board of directors or shareholders or holding a company retreat or recreational event in the state; (iv) maintaining a bank account or banking relationship in the state; or (v) using a vendor in the state for printing, drop shipping or telemarketing services.13

The law is amended and clarified to ensure that the substantial physical presence requirement is applied when considering whether: (i) a person that makes retail sales in Maine of tangible personal property or taxable services on behalf of a principal that is outside the state if the principal is not the holder of a valid registration certificate;14 or (ii) an agent, representative, salesperson, solicitor or distributor that receives compensation by reason of sales of tangible personal property or taxable services made outside Maine by a principal for use, storage or other consumption in Maine, has Maine sales tax nexus.15 Also, the list of activities that do not constitute a substantial physical presence in the state is extended to ensure application to these situations.16


Maine is the latest state to follow the trend of enacting click-through nexus and affiliate nexus provisions that are designed to improve sales and use tax collections.17 Although the sales tax nexus legislation being enacted by many states is similar, the legislation in each state differs slightly from the legislation in other states.

The affiliate nexus provision is not limited to out-of-state sellers that have a common ownership relationship with an entity in Maine. Nexus is established if a "person" with a substantial physical presence in Maine engages in any of the listed activities for the seller. There is no requirement that the "person" be a member of the same controlled group of corporations as the seller.

A major development in the trend toward authorizing states to require remote (out-of-state) sellers to collect sales tax recently occurred at the federal level. On May 6, the U.S. Senate passed the Marketplace Fairness Act of 2013, which would allow states to require remote sellers to collect and remit sales and use tax on sales to in-state residents even if the retailer has no physical presence in the state.18 Under the legislation, a member state of the Streamlined Sales and Use Tax Agreement (SSUTA)19 would be able to require the collection of tax beginning 180 days after it publishes notice of its intent to exercise its authority (but no earlier than the first day of the calendar quarter that is at least 180 days after the legislation is enacted). In order for states that currently are not members of the SSUTA to secure collection and remittance authorization, such states would need to adopt and implement several minimum sales tax simplification requirements.20 The legislation would exempt remote sellers with $1 million or less in annual sales, and would require that an adopting state provide free software to remote sellers to calculate and file sales and use tax returns. If this federal legislation is enacted and states make the simplifying changes to their sales tax statutes, states likely will have less interest in enacting click-through nexus or affiliate nexus legislation to require remote sellers to collect sales tax.

The legislation directs the Maine Office of Fiscal and Program Review to prepare a report that considers the SSUTA, as well as the potential impact of federal legislation such as the Marketplace Fairness Act of 2013.21 Specifically, the report should include information regarding any pending or recently enacted federal legislation that provides states with the authority to compel remote sellers to collect and remit sales tax imposed on purchases made by residents of another state. Also, the report should identify the options available to Maine under the federal legislation and the steps needed in order to compel remote sellers to collect sales tax and remit the tax to Maine. Finally, the report should identify any changes to Maine law that are needed to conform the state's laws with the SSUTA and the options available to provide conformity, including the impact of each option. The Office must submit its report, along with the different proposals for legislation to conform the state's sales and use tax laws with the SSUTA, to the Joint Standing Committee on Taxation by January 15, 2014.


1 Ch. 200 (H.P. 251), Laws 2013, effective 90 days after adjournment. The legislature is scheduled to adjourn on June 19, 2013.

2 ME. CONST., art. IV, part third, § 16.

3 ME. REV. STAT. ANN., tit. 36, § 1754-B(1-A)(C).

4 Id.

5 Id.

6 H.P. 251, § 6.

7 Id.

8 ME. REV. STAT. ANN., tit. 36, § 1754-B(1-A)(B).

9 ME. REV. STAT. ANN., tit. 36, § 1754-B(1-A)(A)(1).

10 Id.

11 ME. REV. STAT. ANN., tit. 36, § 1754-B(1-A)(B).

12 ME. REV. STAT. ANN., tit. 36, § 1754-B(1)(G).

13 Id.

14 ME. REV. STAT. ANN., tit. 36, § 1754-B(1)(D).

15 ME. REV. STAT. ANN., tit. 36, § 1754-B(1)(E).

16 ME. REV. STAT. ANN., tit. 36, § 1754-B(1)(D). Note that under prior law, using a vendor in the state for drop shipping and telemarketing services were on the list of activities that did not constitute a substantial physical presence. These items are no longer on the list, implying that these items may constitute a substantial physical presence, or at the very least, may be an area of scrutiny from the Maine Department of Revenue when examining nexus.

17 The following states have enacted click-through nexus laws: Arkansas, California, Connecticut, Georgia, Illinois, Kansas, New York, North Carolina, Rhode Island and Vermont (contingent on 15 or more states enacting click-through nexus legislation). Also, the following states have enacted some type of affiliate nexus legislation: Arkansas, California, Colorado, Georgia, Illinois, Kansas, New York, Oklahoma, South Dakota, Texas, Utah, Virginia and West Virginia.

18 S. 743, as approved by the U.S. Senate on May 6, 2013. For further information, see GT SALT Alert: U.S. Senate Approves Marketplace Fairness Act that Would Allow States to Impose Sales Tax Collection Requirements on Remote Sellers.

19 Maine is an advisory state that does not conform to the SSUTA.

20 Note that Colorado recently has enacted sales tax simplification legislation to conform to the Marketplace Fairness Act. H.B. 13-1295, Laws 2013. For further information on this legislation, see GT SALT Alert: Colorado Enacts Remote Seller Legislation to Simplify Sales Tax Under Proposed Federal Marketplace Fairness Act.

21 H.P. 251, § 5.

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