As Michigan Goes, So Goes Vermont: Michigan Adopts a Click-Through Nexus Law

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As Michigan Goes, So Goes Vermont: Michigan Adopts a Click-Through Nexus Law


Since we write this blog from Maine, we can take some liberty with this political observation and apply it to sales tax, as we discuss in this article.

On Thursday, January 15, Governor Rick Snyder signed legislation, Senate Bill 658 (MI 97th Legislature, 2014), which is a click-through nexus law.  In particular, the recently-enacted statute, which is effective on October 1, 2015, provides that a presumption of nexus is created when (i) a seller of tangible personal property enters into an agreement with one or more residents of Michigan under which the resident(s), for a commission or other consideration, directly or indirectly, refers potential purchasers, by a link on an Internet website or otherwise, to the seller; (ii) the seller’s sales to Michigan residents as a result of such referrals during the prior 12 months exceed $10,000; and  (iii) the retailer’s gross receipts from sales to Michigan residents during the 12 month period exceed $50,000.  The Michigan law is similar to the click-through nexus laws of 14 other states (New York, Rhode Island, North Carolina, Arkansas, Connecticut, Illinois, Pennsylvania, California, Georgia, Kansas, Maine, Missouri, Minnesota and New Jersey, which are listed in order of adoption.)  There are some differences from other state laws, inasmuch as the Pennsylvania and Connecticut laws create an irrebuttable conclusion of nexus if the thresholds are satisfied.  But like the laws of the other 12 states, the Michigan statute provides that the presumption can be overcome by the retailer proving that the residents do not engage in solicitation activities in Michigan.  The law also provides for a “safe harbor,” similar to that provided for under the New York law, such that if the retailer satisfies the following two conditions, the presumption is overcome:  written agreements between retailers and the resident affiliates prohibiting solicitation and annual written statements from all such affiliates that they did not engage in solicitation.

The enactment of the Michigan statute has a second effect, which I call the “twofer.”   In 2011 (45 H.B. 436, 2011) Vermont enacted a  click-through nexus statute, 32 V.S.A. § 9701(9)(I), which provides for an effective date on  the date that 15 or more states have adopted requirements that are similar to those contained in 32 V.S.A. § 9701(9)(I), as certified by the Vermont Attorney General.   Michigan is the 15th state.   (The same 2011 law provides that, prior to that date, retailers who do not collect the Vermont use tax report on their websites and invoices to their Vermont customers the fact that they do not collect and remit the Vermont sales tax, but remittance is the responsibility of the customer.  32 V.S.A. § 9783.

The Vermont Attorney General has yet to issue the certificate.   It is unclear whether the certificate will be issued and, if so, what will be the date on which the click-through nexus provision goes into effect.   Indeed, the Vermont Governor will be introducing legislation to amend  32 V.S.A. § 9701(9)(I) to make the triggering event the adoption of click-through nexus laws by 25 states, rather than 15 states,  per a statement dated January 7, 2015 of the Vermont Tax Commissioner.  See Tax Commissioner Peterson’s Press Release regarding Statement on Amazon Action.

So, stay tuned for further developments.

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