Connecticut Enacts Click-Through and Affiliate Nexus Legislation

Connecticut Governor Dannel Malloy signed the budget bill for the 2012/2013 biennum which includes provisions enacting click-through and affiliate nexus. The provisions, effective as of May 4, 2011, amend the definition of “retailer” and “engaged in business” to include anyone making sales of taxable items or services through an independent contractor or representative who is located in Connecticut. Click-through nexus would be imposed on a retailer who enters into an agreement with anyone who directly or indirectly refers potential customers to the retailer for a commission or other consideration, whether by a website link or otherwise. The retailer’s cumulative gross receipts from sales to Connecticut residents who are referred to the retailer by anyone located in Connecticut with this type of agreement must exceed $2,000 during the preceding four quarterly periods ending on the last day of March, June, September, and December. The provision presumes that such retailers are soliciting business through independent contractors or other representatives who are located in Connecticut. The proposed bill included a rebuttable presumption. However, the enacted bill eliminated this provision. Affiliate nexus would be created by:

• any person owned or controlled, either directly or indirectly, by a retailer engaged in business in this state which is the same as or similar to the line of business in which such person so owned or controlled is engaged;
• any person owned or controlled, either directly or indirectly, by the same interests that own or control, either directly or indirectly, a retailer engaged in business in this state which is the same as or similar to the line of business in which such person so owned or controlled is engaged

UPDATE: Connecticut enacted remote seller nexus legislation that raises the threshold for the state’s previously enacted click-through nexus legislation from $2,000 in gross receipts to $250,000. Effective December 1, 2018.

UPDATE: Effective July 1, 2019 and applicable to sales on or after July 1, 2019, Connecticut has enacted legislation that lowers the state’s click-through nexus threshold to $100,000 in gross receipts (previously $250,000). The legislation also reduces the threshold for Connecticut’s economic nexus provision. (Act 117 (H.B. 7424), Laws 2019)