California – Affiliate Nexus Information and Annual Certification Forms

SALT Report 1703 – With the new affiliate nexus laws approaching, the California Board of Equalization has issued guidance regarding the sales and use tax collection requirements and the annual certification process that will be imposed on out-of-state retailers.

Under RTC section 6203 (c)(5) a retailer will be considered engaged in business in California and will be required to register to collect use tax if the retailer enters into “an agreement or agreements under which a person or persons in this state, for a commission or other consideration, directly or indirectly refers potential purchasers of tangible personal property to the retailer, whether by an Internet based link or an Internet website, or otherwise.”

However, Sales and Use Tax Regulation 1684 provides that the affiliate nexus provisions will not apply to a retailer if that retailer meets the following conditions:

  • The retailer’s agreement prohibits anyone operating under the agreement from engaging in solicitation activities in California that refer potential customers to the retailer.  These activities include, but are not limited to, flyer distribution, coupons, newsletters and printed promotional materials or electronic equivalents, verbal solicitations, initiating telephone calls, and sending emails,
  • The person or persons operating under the agreement in California certify annually, under penalty of perjury, that they have not engaged in any solicitation activities in California at any time during  the previous year, and
  • The retailer accepts the certification in good faith, and the retailer does not know or have reason to know that the certification or certifications are false or fraudulent

Annual Certification

Organizations should complete the Additional Statement from Organization section on Form BOE-232 however; they may also provide any other documentation that meets the requirements of Regulation 1684. The BOE recommends that you keep the document used to satisfy the annual certification requirements on file for a minimum of eight years.

For Further Information:

California State Board of Equalization – BOE-232 Affiliate Nexus Information