Nevada Enacts Click-Through and Affiliate Legislation

Effective July 1, 2015, for sales and use tax purposes, Nevada has expanded its definition of nexus to include remote sellers if the retailer is: part of a controlled group of business entities that has a component member that has physical presence in Nevada; and the component member engages in certain activities in Nevada that relate to the ability of the retailer to make retail sales to residents of Nevada. The specified activities are when a component member:

• sells a similar line of products or services as the retailer and does so under a business name that is the same or similar to that of the retailer;
• maintains an office, distribution facility, warehouse or storage place or similar place of business in Nevada to facilitate the delivery of tangible personal property sold by the retailer to the retailer’s customers;
• uses trademarks, service marks or trade names in Nevada that are the same or substantially similar to those used by the retailer;
• delivers, installs, assembles or performs maintenance services for the retailer’s customers within Nevada;
• facilitates the retailer’s delivery of tangible personal property to customers in Nevada by allowing the retailer’s customers to pick up tangible personal property sold by the retailer at an office, distribution facility, warehouse, storage place or similar place of business maintained by the component member in Nevada; or
• conducts any other activities in Nevada that are significantly associated with the retailer’s ability to establish and maintain a market in Nevada for the retailer’s products or services.

There is a rebuttable presumption provision included in the legislation stating that a presumption can be rebutted by providing proof that the component member with physical presence in Nevada did not engage in any activity in Nevada that was significantly associated with the retailer’s ability to establish or maintain a market in Nevada for the retailer’s products or services.

The legislation also establishes click through nexus rules which are effective October 1, 2015. A retailer is required to collect and remit sales and use taxes if: the retailer enters into an agreement with a resident of Nevada under which the resident receives certain consideration for referring potential customers to the retailer through a link on the resident’s Internet website or otherwise; and the cumulative gross receipts from sales by the retailer to customers in Nevada through all such referrals exceeds $10,000 during the preceding four quarterly periods ending on the last day of March, June, September and December. The click-through provision can be rebutted by providing proof that each resident with whom the retailer has an agreement did not engage in any activity that was significantly associated with the retailer’s ability to establish or maintain a market in Nevada for the retailer’s products or services during the preceding four quarterly periods. (Ch. 219 (A.B. 380), Laws 2015)