Ohio, Tennessee and Washington Enact Click-Through Legislation


Just as advancements in modern technology are changing the way we conduct business, they are also changing the way in which state governments assert sales and use tax registration and collection responsibilities, also known as “nexus.   Nexus is the minimum amount of contact between a taxpayer and a state that permits the state to impose income tax or sales tax obligations on an entity


With the recent signing of new state budgets, the states of Ohio, Tennessee and Washington have enacted new click-through nexus provisions.

Ohio – Beginning July 1, 2015, a presumption of substantial nexus with Ohio can be created by out-of-state sellers when they enter into agreements with Ohio residents where a resident, for a commission or other consideration, directly or indirectly refers potential customers by a link on a website, or by an in-person oral presentation, or otherwise to the seller

Tennessee –Went into effect on July 1, 2015.  Agreements create the presumption of substantial nexus when the following two conditions are met:

  1. The dealer enters into an agreement with one or more Tennessee residents under which, for consideration, the person refers potential customers to the dealer, by link on an internet website or other means.
  2. The cumulative gross receipts from retail sales by the dealer to customers in Tennessee as a result of the referrals to the dealer by all the dealer’s resident representatives under the type of agreement or contract described above total more than $10,000 during the preceding 12 months.

Washington — New legislation has established new nexus provisions for remote retailers regarding sales and use taxes.  Beginning September 1, 2015, sellers who enter into an agreement with a Washington resident under which the resident receives a commission or other consideration for directly or indirectly referring potential customers by link on an internet website or otherwise to the seller may be creating substantial nexus with Washington state. In addition, on September 1, 2015 economic nexus provisions will also apply for the purposes of imposing B&O tax on out-of-state businesses making wholesales sales in the state.


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