A click-through sales tax nexus is the dangerous reality for retailers in today’s era of internet sales.
Why Is It Dangerous?
The retailer has as many obligations as it does buyers and partners on the World Wide Web. If you think of Google’s paid ad program, they allow the advertiser to market their services on either Google Search or Google Search plus partners. That same system equates “partners” to affiliates.
Remember: A partner/affiliate is somebody who is compensated for selling your product.
For example, if you are set up to do business in Virginia but you have a partner/affiliate in Michigan, then all of the sales from that partner/affiliate’s website that directs buyers to your website count as a click-through sales tax nexus.
That is a very basic and one-dimensional explanation of a click-through nexus. However, in the real world, it is not always as simple as knowing where your affiliates are located.
The Click-Through Sales Tax Nexus Standard in Georgia
- Threshold: More than $50,000.00 in the preceding 12 months.
- Legal Standard: Georgia has a rebuttable presumption.
Additional Resources
To read the latest regulations, see the link below:
Georgia Department of Revenue – Remote Sellers Policy Bulletin (PB_SUT-2018-07)
Frequently Asked Questions
What is a click-through sales tax nexus?
A click-through sales tax nexus is created when an out-of-state retailer makes sales through referrals from in-state affiliates or partners who are compensated for directing traffic. This activity may establish a tax obligation in the state where the affiliate is located.
Why is a click-through nexus considered dangerous for online retailers?
It creates unexpected tax liabilities in states where the business has no physical presence but generates sales through affiliate links. Retailers may unknowingly trigger nexus by partnering with out-of-state affiliates, leading to compliance risks and potential penalties.
How does affiliate marketing relate to tax obligations?
When an affiliate (or partner) promotes a retailer’s product and receives a commission for sales, that relationship can create a taxable connection (nexus) in the affiliate’s state. This means the retailer might owe sales tax in that state, even without having a physical office or employee there.
What is the threshold for a click-through nexus in Georgia?
In Georgia, a click-through nexus is presumed if a retailer generates more than $50,000 in sales through in-state affiliates over the preceding 12 months. This triggers a legal obligation to collect and remit sales tax unless the presumption is successfully rebutted.
Where can I find more information about Georgia’s click-through nexus rules?
You can review Georgia’s specific regulations in the Remote Sellers Policy Bulletin (PB_SUT-2018-07) provided by the Georgia Department of Revenue. This bulletin outlines how the state enforces nexus standards and the rebuttable presumption clause.
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