A bill has been introduced in the Indiana Senate that would amend the definition of “a retail merchant engaged in Indiana” for sales and use tax purposes. In addition, the introduced bill contains affiliate nexus and click-through nexus provisions.
Under the bill, a retail merchant engaged in business in Indiana would include a person that enters into an arrangement with any person, other than a common carrier, to facilitate the retail merchant’s delivery of property to customers in Indiana. Such facilitation would involve allowing the retail merchant’s customers to pick up property sold by the retail merchant at an office, distribution facility, warehouse, storage place, or similar place of business maintained by the person in Indiana.
The bill provides for affiliate nexus by creating a rebuttable presumption that a retail merchant is engaged in business in Indiana if an affiliate of the retail merchant has substantial nexus with Indiana and certain additional conditions are met.
The bill also provides for click-through nexus by creating a rebuttable presumption that a retail merchant is engaged in business in Indiana where a retail merchant enters into an agreement with an Indiana resident under which the resident, in exchange for commission or a consideration, directly or indirectly refers potential customers to the retail merchant. The referral may be by a link on an Internet website, an in-person oral presentation or otherwise. Further, the presumption would apply only if the cumulative gross receipts from the sales by the retail merchant to all Indiana customers who are referred under this type of arrangement are greater than $10,000 during the preceding 12 months.
The amendments under the bill would apply only to the collection of use tax on remote sales occurring after June 30, 2013. Additional conditions are included under which taxpayers would determine whether the amendments would apply to their transactions.
S.B. 309, as introduced in the Indiana Senate on January 8, 2013