What is click-through nexus?

Modified on Wed, 9 Oct at 12:41 AM

Click-through nexus also known as “affiliate nexus” happens when an out-of-state business with no physical presence in a state initiates a sales tax duty through online referrals, i.e. click-through originating from within the state the click-through activity derives from.

Not all states have click through nexus allocations, here is a list of the states that do:

Arkansas	Louisiana	New Jersey	Tennessee
California	Maine	New York	Vermont
Connecticut	Michigan	North Carolina	Washington
Georgia	Minnesota	Ohio
Idaho	Missouri	Pennsylvania
Kansas	Nevada	Rhode Island

To better understand click through nexus, let’s imagine that a social media personality from Nevada posts a viral TikTok with a link raving about this new state-of-the-art desk organizer sold by a furniture retailer located in Michigan.

A follower of this social media personality clicks the link and purchases the new desk organizer for their home. The state of Nevada could then argue that the retailer used the viral social media post produced in Nevada to generate income. Therefore, the furniture retailer would be responsible for paying sales tax to the state of Nevada once they exceed the click-through nexus state threshold.

Click-through nexus state thresholds:

State	Threshold Requirement	Rebuttable Presumption?
Arkansas	Exceeds $10,000 USD in transactional sales during the last 12 months.	✓
California	Exceeds $10,000 USD in transactional sales and more than $1 million USD in annual in-state sales.	✓
Connecticut	Exceeds $2,000 USD in transactional sales during the last four quarterly filing periods.	Irrebuttable presumption
Georgia	Exceeds $50,000 USD in transactional sales in the duration of the last 12 months.	✓
Idaho	Exceeds $10,000 USD in transactional sales during the last 12 months.	✓
Kansas* *Kansas no longer has click-through nexus after June 30, 2021	Exceeds $10,000 USD in transactional sales during the last 12 months.	✓
Louisiana	Exceeds $50,000 USD in transactional sales during the last 12 months.	✓
Maine	Exceeds $10,000 USD in transactional sales during the last 12 months.	✓
Michigan	Exceeds $10,000 USD in transactional sales during the immediately preceding 12 months.	✓
Minnesota	Exceeds $10,000 USD in the 12-month period ending on the last day of the most recent calendar quarter prior to the calendar quarter.	✓
Missouri	Exceeds $10,000 USD in transactional sales during the last 12 months.	✓
Nevada	Exceeds $10,000 USD in transactional sales following the most recent past quarterly four periods.	✓
New Jersey	Exceeds $10,000 USD in transactional sales during the most recent four quarterly periods.	✓
New York	Exceeds $10,000 USD in transactional sales.	✓
North Carolina	Exceeds $10,000 USD in transactional sales during the last four quarterly periods.	✓
Ohio	Exceeds $10,000 USD in transactional sales during the previous calendar year.	✓
Pennsylvania	Although there is no threshold specified, you should assume you owe sales tax if you have click-through nexus in this state.	*No presumption established for the state.
Rhode Island	Exceeds $5,000 USD in transactional sales during the past four quarterly periods.	✓
Tennessee	Exceeds $10,000 USD in transactional sales during the past 12 month period.	✓
Vermont	Exceeds $10,000 USD in transactional sales during the previous tax year.	✓
Washington	Exceeds $10,000 USD in transactional sales during the previous tax year.	✓

Keywords Defined:

Rebuttable presumption means you can potentially prove that you do not need to pay the state where you qualify for click-through nexus.

Irrebuttable presumption means that regardless of how strong your evidence may possibly be, the state’s law will not allow you to not pay if you qualify for click-through nexus.

Although click-through nexus can be intricate in the world of sales tax compliance for online sellers, it’s imperative to understand the thresholds in each state to prevent any unanticipated tax liabilities.

Being knowledgeable about referral programs and taking advantage of applicable tax exemptions can help your business maneuver click-through nexus obstacles and ensure that you are sales tax compliant. You can check out our FAQ for even more information and of course, our customer care team can assist you with additional questions!

FAQ

What are referral programs?

These programs or incentives are typically given to individuals who refer new clients, business entities, or service providers to join their sales tax compliance network or program. These incentives or rewards come in many forms such as discounts, credits, gift cards, exclusive access to services or products, etc.