In response to the Illinois Supreme Court decision in the Performance Marketing Association, Inc. v. Hamer case, Illinois has enacted revised click-through nexus legislation, effective January 1, 2015. Under the legislation, a retailer is presumed to have nexus in Illinois for use tax and service tax purposes if the retailer has a contract with an Illinois person under which the person, for a commission or other consideration based on the sale of property by the retailer, directly or indirectly refers potential customers to the retailer by providing a promotional code or other mechanism that allows the retailer to track purchases referred by the person. Examples of mechanisms that allow the retailer to track purchases include but are not limited to a link on the person’s website, promotional codes distributed through hand delivery or by mail, or promotional codes distributed through radio or other broadcast media. The click-through nexus provisions apply only if the cumulative gross receipts from sales of tangible personal property by the retailer to customers referred to the retailer by all persons in Illinois under such contracts exceed $10,000 during the preceding four quarterly periods. The presumption can be rebutted by submitting proof that the referrals or other activities pursued in Illinois by such persons did not create nexus pursuant to the U.S. Constitution during the preceding four quarterly periods. The affiliate nexus provisions which were passed in 2011 have continued to apply and have not been amended. (P.A. 98-1089 (S.B. 352), Laws 2014, effective January 1, 2015)
UPDATE: Illinois has enacted legislation that repeals the state’s click-through nexus provisions described in this news item, effective June 28, 2019. For more information, read our updated news item: Illinois Repeals Click-Through and Affiliate Nexus Provisions.
Update: On December 13, 2019, Illinois Gov. J.B. Pritzker signed legislation that re-enacts the state’s click-through nexus and affiliate nexus provisions, effective January 1, 2020. Affected out-of-state retailers will want to monitor their sales into Illinois to determine if they meet the thresholds of the state’s click-through nexus and/or affiliate nexus provisions and are therefore required to register to collect and remit sales tax in Illinois. (P.A. 101-0604 (S.B. 119), Laws 2019)