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.
- 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.
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