Missouri’s New Click-Through and Affiliate Nexus Provisions
Senate Bill 23 was recently approved by the governor and will become effective on August 28, 2013. This legislation will cause more vendor collection of Missouri sales and use tax by changing the nexus requirements for out-of-state vendors and has been described as allowing “click-through and affiliate nexus provisions.”
This legislation removes the exception from the definition of “vendor,” as it applies to a collector of Missouri sales and use tax. Under current law, the term vendor excludes a person that meets all of the following:
- The person’s gross receipts for Missouri were less than $500,000 or nation-wide were less than $12,500,000 in the previous calendar year;
- The person did not have a place of business in Missouri; and
- The person has no selling agents in Missouri.
The new definition of “vendor” will merely be any person who “engages in business activities within this state.” Senate Bill 23 redefines the phrase “engages in business activities within this state.” Under current law, the phrase is defined as:
- The activity of exploiting the market in Missouri through media-solicited means such as direct mail, television, radio or other electronic media, or
- Owned or controlled by a same interest that also owns another company in the same line of business in Missouri.
The new legislation removes these requirements and adds the following presumptions that a vendor “engages in business activities within this state” if:
- Any person with substantial nexus with Missouri sells a similar line of products and uses a similar business name to the vendor;
- Any person has an office, warehouse or place of business in Missouri to facilitate delivery of products sold by the vendor to its customers;
- Any person delivers, installs, assembles, or provides maintenance services in Missouri for the vendor;
- Any person allows the vendor’s customers to pick up product at person’s place of business in Missouri; or
- Any person conducts any activities that establish and maintain a market for the vendor in Missouri.
These presumptions can be challenged if the vendor can demonstrate that the person’s Missouri activities do not significantly establish or maintain a market in Missouri for the vendor's sales.
Additionally, under this bill, a vendor is deemed to “engage in business activities within this state” if the vendor has an agreement with a Missouri resident to refer potential customers to the vendor, whether through a website link, telemarketing, or in-person presentations. Sales from these referrals must exceed $10,000 during the previous 12 months for this specific provision to apply.
This presumption is rebuttable if the resident provides a sworn written statement that the resident did not engage in any activity within Missouri that was significantly associated with the vendor's market in Missouri during the previous 12 months.
Senate Bill 23 also voids any agreements between a person and the state of Missouri, such as the Governor or the Missouri Department of Revenue, that allowed such person to not collect sales and use taxes in Missouri despite the presence of a warehouse, distribution center, or fulfillment center in Missouri that is owned or operated by such person.
This new legislation will expand the state’s ability to require out-of-state vendors to collect and remit Missouri sales and use tax. Out-of-state vendors should consult with their Brown Smith Wallace advisor or Amy Jackson at (314)983-1336 or firstname.lastname@example.org to determine if their activities in Missouri create a sales and use tax filing requirement under Senate Bill 23.