Kansas has enacted legislation containing click-through and affiliate nexus provisions. Effective 90 days after the enactment of the legislation, a retailer is presumed to be doing business in Kansas if the retailer enters into an agreement with a Kansas resident under which the resident, for a commission or other consideration, directly or indirectly refers potential customers, whether by a link or a website, telemarketing, an in-person oral presentation, or otherwise, to the retailer. To be presumed to be doing business in Kansas, cumulative gross receipts from sales by the retailer to customers in Kansas who are referred to the retailer by all residents with this type of an agreement with the retailer must be more than $10,000 during the preceding 12 months. This presumption can be rebutted if the retailer submits proof that the Kansas residents with whom the retailer has an agreement did not engage in any activity within the state significantly associated with the retailer’s ability to establish or maintain the retailer’s market in the state during the preceding 12 months. Proof can consist of sworn written statements obtained in good faith from all of the residents with whom the retailer has an agreement stating that they did not engage in any solicitation in the state on behalf of the retailer during the preceding year. For purposes of the legislation, “preceding 12 months” includes the 12 months beginning prior to the effective date of the legislation. Additionally, the date when a retailer and a resident enter into this type of agreement is not relevant.
The legislation also creates a rebuttable presumption that a retailer is doing business in Kansas if an affiliated person of the retailer with a physical presence, or employees or agents in Kansas, has sufficient nexus in Kansas to require the retailer to collect and remit sales and use taxes on taxable retail sales of tangible personal property or services. The affiliate nexus presumption can be rebutted by showing that the activities of the affiliated person are not significantly associated with the retailer’s ability to establish or maintain a market in Kansas for the retailer’s sales. “Affiliated person” is defined as any person that is a member of the same “controlled group of corporations” as the retailer, or any other entity that, regardless of how it is organized, bears the same ownership relationship to the retailer as a corporation that is a member of the same controlled group of corporations.
The presumption that a retailer is doing business in Kansas also applies if any person (other than a common carrier acting in its capacity as such) who has sufficient nexus in Kansas to require the collection and remittance of sales and use taxes: 1) uses trademarks, service marks, or trade names in Kansas that are the same or substantially similar to those used by the retailer; 2) delivers, installs, assembles, or performs maintenance services for the retailer’s customers within Kansas; 3) facilitates the retailer’s delivery of property to customers in Kansas by allowing the retailer’s customers to pick up property sold by the retailer at an office, distribution facility, warehouse, storage place, or similar place of business maintained by the person in Kansas; or 4) conducts any other activities in the state that are significantly associated with the retailer’s ability to establish and maintain a market in the state for the retailer’s sales. These four categories are in addition to any other categories currently in effect under the law.
The Department has provided additional guidance stating that the click-through nexus provisions take effect on October 1, 2013. The affiliate nexus provisions and various amendments to the definition of “retailer doing business in this state” take effect on July 1, 2013. The Department also reminded taxpayers that every retailer doing business in Kansas who makes taxable sales of tangible personal property for use, storage, or consumption in Kansas has a duty to collect Kansas state and local use tax due from customers and to timely report and remit the taxes. (S.B. 83, Laws 2013, effective upon publication in the Kansas Register; Notice 13-05, Kansas Department of Revenue, May 10, 2013)