On April 3, 2013, the Kansas legislature passed a bill (S.B. 83) that expands the definition of doing business in the state for sales tax purposes to so-called click-through arrangements. Click-through arrangements are agreements between a remote seller and Kansas (in this case) resident(s) to place links on the resident’s website(s) that, when clicked, direct users to the respective remote seller’s website for compensation. This is significant for remote sellers in any state because it indicates a growing trend. Under this proposed law, remote sellers who enter into click-through arrangements with Kansas residents will be presumed to have nexus with Kansas sufficient to obligate it to collect and remit sales taxes for such sales, assuming sales receipts derived under these arrangements exceed $10,000.
The relevant provision of the law reads as follows:
A retailer shall be presumed to be doing business in this state if any of the following occur: . . . The retailer enters into an agreement with one or more residents of this state under which the resident, for a commission or other consideration, directly or indirectly refers potential customers, whether by a link or an internet website, by telemarketing, by an in-person oral presentation, or otherwise, to the retailer, if the cumulative gross receipts from sales by the retailer to customers in the state who are referred to the retailer by all residents with this type of an agreement with the retailer is in excess of $10,000 during the preceding 12 months.
Governor Brownback is expected to sign the bill.
The New York legislature previously enacted a bill with similar reach that was upheld in its highest court. This decision and law were covered in the April 11, 2013 Multistate Tax Update.
Click here to read the April 11, 2013 Multistate Tax Update.
Click here to read the text of S.B. 83.