Indiana – Click-Through and Affiliate Nexus Bill Filed

SALT Report 1318 – The Indiana Senate has introduced legislation regarding sales and use tax click-through and affiliate nexus provisions. If enacted, the bill would amend the definition of retail merchant engaged in business in Indiana.

A retail merchant would now be defined as any merchant making retail transactions in which a person acquires personal property or taxable services for use, storage, or consumption in Indiana; and any merchant who enters into an arrangement with any person, other than a common carrier, to facilitate the retail merchant’s delivery of property to customers in Indiana by allowing the retail merchant’s customers to pick up property sold by the retail merchant at an office, distribution facility, warehouse, storage place, or similar place of business maintained by the person in Indiana.

The definition would further be amended to provide that a retail merchant would not be required to collect and remit gross retail tax or use tax as a merchant engaged in business in Indiana unless the merchant has a physical presence in Indiana or the activities conducted in Indiana on behalf of the merchant are significantly associated with the retail merchant’s ability to establish and maintain a market in Indiana.

In addition, a retail merchant would be presumed to be engaged in business in Indiana if an affiliate of the merchant has substantial nexus in Indiana and:

  • The retail merchant sells a line of products similar to a line of products sold by the affiliate, and the retail merchant does so under a business name that is the same as or is similar to the affiliate’s business name;
  • The affiliate uses its Indiana employees or its Indiana facilities to advertise, promote, or facilitate sales by the retail merchant to customers; or
  • The affiliate uses trademarks, service marks, or trade names in Indiana that are the same as or substantially similar to those used by the retail merchant.
If enacted, a retail merchant would be presumed to be engaged in business in Indiana if the retail merchant entered into an agreement with one or more Indiana residents under which the resident, for a commission or other consideration, refers potential customers, whether by a link on an Internet website, an in-person oral presentation, to the retail merchant.  The cumulative gross receipts from the sales by the retail merchant to Indiana customers and are referred to the retail merchant by residents were greater than $10,000 during the preceding 12 months.
This presumption may be rebutted by submitting proof that the residents with whom the retail merchant had an agreement did not engage in any activity within Indiana that was significantly associated with the retail merchant’s ability to establish or maintain a market in Indiana during the preceding 12 months.
The proof could consist of sworn written statements that:
  • Are from all Indiana residents with whom the retail merchant has an agreement;
  • Are provided and obtained in good faith; and
  • State that the Indiana residents did not engage in any solicitation in Indiana on behalf of the retail merchant during the preceding 12 months.

If enacted, the legislation would be effective July 1, 2012.

For Further Information:

Indiana General Assembly – Senate Bill  100