Before Tim Berners-Lee invented the World Wide Web for the Internet, a business’s location was generally limited to its brick-and-mortar office or storefront. The WWW and the internet are now considered one and the same, by most. Allowing the Internet to created new options for operating a small business. It is now possible to operate a multimillion-dollar global business from a single location, crossing multiple taxing authorities.
“Nexus” is defined as a significant physical presence, but in terms of sales and use tax, the definition is more mutable and vague. The term has been used to describe a business’s presence within a jurisdiction in order to determine its tax payment and reporting requirements.
Consequently, online sales and marketing can activate a type of nexus referred to as an “attribution nexus,” which occurs when businesses in different states link their websites together to direct online traffic to each other through affiliate or reseller programs. Unfortunately, many business managers are unaware that simply paying to link their business website to an affiliate website can create “clickthrough nexus” in the state where the affiliate has nexus.
States and the federal government are consistently looking for means to tax and collect funds from those who exist beyond their state lines. The taxing of others beyond the state lines is always a formidable campaign approach for politicians.
Know where your clients are located and how they became your clients. The information may be required to fight a nexus claim from another state.