United States: Nevada Enacts Rebuttable Presumption Of Sales And Use Tax Nexus

On May 27, Nevada Governor Brian Sandoval signed legislation which includes clickthrough nexus and affiliate nexus provisions for purposes of the state's sales and use tax.1 The click-through nexus provision, effective October 1, 2015, creates a presumption of nexus for out-of-state retailers that have an agreement to pay a Nevada resident for providing a link to the retailer's Web site.2 Effective July 1, 2015, the affiliate nexus provision creates a presumption of nexus for out-of-state retailers if a component member of a controlled group has physical presence in Nevada and performs certain activities.3

Click-Through Nexus

Beginning October 1, 2015, an out-of-state retailer is presumed to be doing business in Nevada and is required to impose, collect, and remit sales and use taxes if the retailer enters into an agreement with a resident of Nevada under which the resident receives consideration for referring potential customers to the retailer through a link on the resident's Internet website or otherwise.4

This provision only applies if the cumulative gross receipts from sales by the retailer to customers in Nevada through all such referrals exceed $10,000 during the preceding four quarterly periods ending on the last day of March, June, September and December.5

Rebuttable Presumption

The presumption may be rebutted by submitting proof that the residents with whom the retailer has an agreement did not engage in any activity in Nevada that was significantly associated with the retailer's ability to establish or maintain a market in Nevada for the retailer's products and services during the preceding four quarters ending on the last day of March, June, September and December.6 The retailer may prove this by submitting sworn written statements from all of the residents with whom the retailer has an agreement that they did not engage in any solicitation in Nevada on behalf of the retailer during that time frame.7

Affiliate Nexus

As of July 1, 2015, an out-of-state retailer is presumed to be doing business in Nevada if it is part of a controlled group of corporations that has a component member,8 other than a common carrier acting as a common carrier, that has physical presence in Nevada and such component member engages in any of the following activities:

  • Sells a similar line of products or services as the retailers and does so under a business name that is the same or similar to that of the retailer;
  • Maintains an office, distribution facility, warehouse or storage place or similar place of business in Nevada to facilitate the delivery of tangible personal property sold by the retailer to its customers;
  • Uses trademarks, service marks or trade names in Nevada that are the same or substantially similar to those used by the retailer;
  • Delivers, installs, assembles or performs maintenance services for the retailer's customers within Nevada;
  • Facilitates the retailer's delivery of tangible personal property to customers in Nevada by allowing the retailer's customers to pick up tangible personal property sold by the retailer at an office, distribution facility, warehouse, storage place or similar place of business maintained by the component member in Nevada; or
  • Conducts any other activities in Nevada that are significantly associated with the retailer's ability to establish and maintain a market in the state for the retailer's products or services.9

Rebuttable Presumption

The presumptions may be rebutted by providing proof satisfactory to the Department that, during the calendar year in question, the activities of the component member with physical presence in Nevada are not significantly associated with the retailer's ability to establish or maintain the retailer's market in Nevada.10

Department Reporting Requirement

The legislation also requires the Department to report to the Nevada legislature within 30 days all findings, rulings, or agreements made by the Department or the Nevada Tax Commission which exempt any retailer from the legal requirements to impose, collect, and remit sales and use taxes even though the retailer or an affiliate owns or operates a warehouse, distribution center, fulfillment center or other similar facility in Nevada.11

Commentary

By enacting click-through and affiliate nexus provisions designed to improve sales and use tax collections, Nevada joins the ranks of several other states.12 Although the intent behind the legislation which has been enacted by many states is similar, the enacted wording does have some differences, resulting in a potentially significant burden on companies that only maintain tangential contacts with these states through affiliates or associates.

As noted in the legislative summary, the click-through statute enacted by Nevada is similar to the New York statute while the affiliate nexus provision mirrors Colorado statutes. The New York State Court of Appeals, the state's highest court, has held that New York's click-through nexus statute does not facially violate the U.S. Constitution under either the Commerce or Due Process Clauses.13

Along with the various states that have proposed or enacted sales tax nexus laws, the Marketplace Fairness Act is currently being considered by the U.S. Senate.14 Although previous versions of this bill have failed to gain enough support for passage, it appears that there is renewed legislative interest. U.S. Representative Jason Chaffetz (R-Utah) has publicly referenced plans15 to introduce similar legislation for consideration. Generally, both bills would allow states meeting certain requirements to require remote sellers to collect and remit sales tax to jurisdictions in which their customers are located. Online retailers with out-of-state sales of no more than $1 million a year would be exempt. Presumably, if federal legislation addressing this issue is enacted, the need for the states to enact separate click-through nexus or affiliate nexus legislation will wane.

Footnotes

1 Ch. 219 (A.B. 380), Laws 2015.

2 Ch. 219 (A.B. 380), Laws 2015, §§ 3, 6, and 7.

3 Ch. 219 (A.B. 380), Laws 2015, §§ 2, 5, and 7.

4 Ch. 219 (A.B. 380), Laws 2015, §§ 3.1 and 6.1.

5 Id.

6 Ch. 219 (A.B. 380), Laws 2015, §§ 3.2 and 6.2.

7 Id. The statements must be provided and obtained in good faith.

8 Ch. 219 (A.B. 380), Laws 2015, §§ 2.1 and 5.1. Controlled group" and "component member" are defined as in the Internal Revenue Code of 1986, as amended, § 1563(a) and (b). The terms also include any entity, regardless of corporate form, that would meet these definitions based on ownership relationship alone.

9 Ch. 219 (A.B. 380), Laws 2015, §§ 2.1 and 5.1.

10 Ch. 219 (A.B. 380), Laws 2015, §§ 2.2 and 5.2.

11 Ch. 219 (A.B. 380), Laws 2015, § 1. If the Nevada legislature is not in session, the report must be provided to the Legislative Commission.

12 The following states have enacted click-through nexus laws: Arkansas, California, Colorado, Connecticut, Georgia, Illinois, Kansas, Maine, Michigan, Minnesota, Missouri, New Jersey, New York, North Carolina, Rhode Island and Vermont (contingent on 15 or more states enacting clickthrough nexus legislation). Similarly, the following states have enacted affiliate nexus laws: Arkansas, California, Colorado, Connecticut, Georgia, Illinois, Iowa, Kansas, Maine, Michigan, Missouri, New York, Oklahoma, South Dakota, Texas, Utah, Virginia, and West Virginia.

13 Overstock.com, Inc. v. New York State Department of Taxation and Finance, New York State Court of Appeals, Nos. 33 and 34, March 28, 2013 (cert. denied, U.S. Sup. Court, Dkt. 13-252, Dec. 2, 2013). For a discussion of this case, see GT SALT Alert: New York State Court of Appeals Holds Click- Through Nexus Statute Is Facially Constitutional and GT SALT Alert: U.S. Supreme Court Declines to Consider Whether New York's Click-Through Nexus Statute is Facially Constitutional .

14 S. 698, "Marketplace Fairness Act of 2015," introduced Mar. 10, 2015. A previous version of this bill, S. 743 (113th) passed the U.S. Senate in 2013 but failed to pass the U.S. House.

15 Rep. Chaffetz referenced the "Remote Transaction Parity Act" at the National Conference of State Legislatures meeting on Dec. 10, 2014. To date, the legislation has not been introduced.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

To print this article, all you need is to be registered on Mondaq.com.

Click to Login as an existing user or Register so you can print this article.

Authors
Similar Articles
Relevancy Powered by MondaqAI
 
In association with
Related Topics
 
Similar Articles
Relevancy Powered by MondaqAI
Related Articles
 
Related Video
Up-coming Events Search
Tools
Print
Font Size:
Translation
Channels
Mondaq on Twitter
 
Register for Access and our Free Biweekly Alert for
This service is completely free. Access 250,000 archived articles from 100+ countries and get a personalised email twice a week covering developments (and yes, our lawyers like to think you’ve read our Disclaimer).
 
Email Address
Company Name
Password
Confirm Password
Position
Mondaq Topics -- Select your Interests
 Accounting
 Anti-trust
 Commercial
 Compliance
 Consumer
 Criminal
 Employment
 Energy
 Environment
 Family
 Finance
 Government
 Healthcare
 Immigration
 Insolvency
 Insurance
 International
 IP
 Law Performance
 Law Practice
 Litigation
 Media & IT
 Privacy
 Real Estate
 Strategy
 Tax
 Technology
 Transport
 Wealth Mgt
Regions
Africa
Asia
Asia Pacific
Australasia
Canada
Caribbean
Europe
European Union
Latin America
Middle East
U.K.
United States
Worldwide Updates
Registration (you must scroll down to set your data preferences)

Mondaq Ltd requires you to register and provide information that personally identifies you, including your content preferences, for three primary purposes (full details of Mondaq’s use of your personal data can be found in our Privacy and Cookies Notice):

  • To allow you to personalize the Mondaq websites you are visiting to show content ("Content") relevant to your interests.
  • To enable features such as password reminder, news alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our content providers ("Contributors") who contribute Content for free for your use.

Mondaq hopes that our registered users will support us in maintaining our free to view business model by consenting to our use of your personal data as described below.

Mondaq has a "free to view" business model. Our services are paid for by Contributors in exchange for Mondaq providing them with access to information about who accesses their content. Once personal data is transferred to our Contributors they become a data controller of this personal data. They use it to measure the response that their articles are receiving, as a form of market research. They may also use it to provide Mondaq users with information about their products and services.

Details of each Contributor to which your personal data will be transferred is clearly stated within the Content that you access. For full details of how this Contributor will use your personal data, you should review the Contributor’s own Privacy Notice.

Please indicate your preference below:

Yes, I am happy to support Mondaq in maintaining its free to view business model by agreeing to allow Mondaq to share my personal data with Contributors whose Content I access
No, I do not want Mondaq to share my personal data with Contributors

Also please let us know whether you are happy to receive communications promoting products and services offered by Mondaq:

Yes, I am happy to received promotional communications from Mondaq
No, please do not send me promotional communications from Mondaq
Terms & Conditions

Mondaq.com (the Website) is owned and managed by Mondaq Ltd (Mondaq). Mondaq grants you a non-exclusive, revocable licence to access the Website and associated services, such as the Mondaq News Alerts (Services), subject to and in consideration of your compliance with the following terms and conditions of use (Terms). Your use of the Website and/or Services constitutes your agreement to the Terms. Mondaq may terminate your use of the Website and Services if you are in breach of these Terms or if Mondaq decides to terminate the licence granted hereunder for any reason whatsoever.

Use of www.mondaq.com

To Use Mondaq.com you must be: eighteen (18) years old or over; legally capable of entering into binding contracts; and not in any way prohibited by the applicable law to enter into these Terms in the jurisdiction which you are currently located.

You may use the Website as an unregistered user, however, you are required to register as a user if you wish to read the full text of the Content or to receive the Services.

You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these Terms or with the prior written consent of Mondaq. You may not use electronic or other means to extract details or information from the Content. Nor shall you extract information about users or Contributors in order to offer them any services or products.

In your use of the Website and/or Services you shall: comply with all applicable laws, regulations, directives and legislations which apply to your Use of the Website and/or Services in whatever country you are physically located including without limitation any and all consumer law, export control laws and regulations; provide to us true, correct and accurate information and promptly inform us in the event that any information that you have provided to us changes or becomes inaccurate; notify Mondaq immediately of any circumstances where you have reason to believe that any Intellectual Property Rights or any other rights of any third party may have been infringed; co-operate with reasonable security or other checks or requests for information made by Mondaq from time to time; and at all times be fully liable for the breach of any of these Terms by a third party using your login details to access the Website and/or Services

however, you shall not: do anything likely to impair, interfere with or damage or cause harm or distress to any persons, or the network; do anything that will infringe any Intellectual Property Rights or other rights of Mondaq or any third party; or use the Website, Services and/or Content otherwise than in accordance with these Terms; use any trade marks or service marks of Mondaq or the Contributors, or do anything which may be seen to take unfair advantage of the reputation and goodwill of Mondaq or the Contributors, or the Website, Services and/or Content.

Mondaq reserves the right, in its sole discretion, to take any action that it deems necessary and appropriate in the event it considers that there is a breach or threatened breach of the Terms.

Mondaq’s Rights and Obligations

Unless otherwise expressly set out to the contrary, nothing in these Terms shall serve to transfer from Mondaq to you, any Intellectual Property Rights owned by and/or licensed to Mondaq and all rights, title and interest in and to such Intellectual Property Rights will remain exclusively with Mondaq and/or its licensors.

Mondaq shall use its reasonable endeavours to make the Website and Services available to you at all times, but we cannot guarantee an uninterrupted and fault free service.

Mondaq reserves the right to make changes to the services and/or the Website or part thereof, from time to time, and we may add, remove, modify and/or vary any elements of features and functionalities of the Website or the services.

Mondaq also reserves the right from time to time to monitor your Use of the Website and/or services.

Disclaimer

The Content is general information only. It is not intended to constitute legal advice or seek to be the complete and comprehensive statement of the law, nor is it intended to address your specific requirements or provide advice on which reliance should be placed. Mondaq and/or its Contributors and other suppliers make no representations about the suitability of the information contained in the Content for any purpose. All Content provided "as is" without warranty of any kind. Mondaq and/or its Contributors and other suppliers hereby exclude and disclaim all representations, warranties or guarantees with regard to the Content, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. To the maximum extent permitted by law, Mondaq expressly excludes all representations, warranties, obligations, and liabilities arising out of or in connection with all Content. In no event shall Mondaq and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use of the Content or performance of Mondaq’s Services.

General

Mondaq may alter or amend these Terms by amending them on the Website. By continuing to Use the Services and/or the Website after such amendment, you will be deemed to have accepted any amendment to these Terms.

These Terms shall be governed by and construed in accordance with the laws of England and Wales and you irrevocably submit to the exclusive jurisdiction of the courts of England and Wales to settle any dispute which may arise out of or in connection with these Terms. If you live outside the United Kingdom, English law shall apply only to the extent that English law shall not deprive you of any legal protection accorded in accordance with the law of the place where you are habitually resident ("Local Law"). In the event English law deprives you of any legal protection which is accorded to you under Local Law, then these terms shall be governed by Local Law and any dispute or claim arising out of or in connection with these Terms shall be subject to the non-exclusive jurisdiction of the courts where you are habitually resident.

You may print and keep a copy of these Terms, which form the entire agreement between you and Mondaq and supersede any other communications or advertising in respect of the Service and/or the Website.

No delay in exercising or non-exercise by you and/or Mondaq of any of its rights under or in connection with these Terms shall operate as a waiver or release of each of your or Mondaq’s right. Rather, any such waiver or release must be specifically granted in writing signed by the party granting it.

If any part of these Terms is held unenforceable, that part shall be enforced to the maximum extent permissible so as to give effect to the intent of the parties, and the Terms shall continue in full force and effect.

Mondaq shall not incur any liability to you on account of any loss or damage resulting from any delay or failure to perform all or any part of these Terms if such delay or failure is caused, in whole or in part, by events, occurrences, or causes beyond the control of Mondaq. Such events, occurrences or causes will include, without limitation, acts of God, strikes, lockouts, server and network failure, riots, acts of war, earthquakes, fire and explosions.

By clicking Register you state you have read and agree to our Terms and Conditions