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March 22nd, 2012, 03:42 PM #1What constitutes a nexus?
Wouldn't Adsense and SERPs on the Google constitute a nexus?
The Google has offices all over the place.
Has anyone seen or heard of the Google's stance on nexus tax laws?
I have seen some states that have stated that any website link constitutes a nexus (believe it was California's).
Here is a list of the Google's offices:
Google offices ? CompanySalty kisses, Sandy toes, and a Pirate's heart...
March 22nd, 2012, 04:34 PM #2
...or how about the "networks" themselves? (Various networks tracking and doing record-keeping for millions of dollars worth of sales through offices in various states)
March 22nd, 2012, 04:40 PM #3
It's always been interesting for me to think about this issue in terms of enforcement, based on what Bill is alluding to. Seems the only way for a state like NY to enforce an Amazon tax law would be to have access to our data, and we're in UT. I guess if they wanted to get it from us they could, but what a process.
March 22nd, 2012, 04:41 PM #4
Very good point Bill. I am really surprised that this relationship has not been exploited more in formulating state affiliate tax laws. I suspect it is because few state legislators know such networks exist and certainly do not understand what they actually do.
March 22nd, 2012, 05:10 PM #5
Nexus is based on a physical presence in the state; appearing online is not sufficient to establish nexus. So a website link through someone who actually lives in the state is required to for nexus.
Since the networks don't collect the actual funds, they can't be used to establish nexus, nor as the record keepers for transactions. The states want taxes on all sales from each merchant, not just the ones that happen through affiliates. Affiliate relationships are merely the tool used to establish nexus to try and force out of state merchants to collect and remit sales tax.
Honestly, most legislators do not understand how our industry works. Their only knowledge is coming from local businessmen, or from lobbyists from Target, Wal-Mart, Best Buy, etc. That's why it is so important for affiliates to actually meet with their legislators to explain how our business works.
And, FYI, just saying consumers can save money by shopping only does NOT matter to legislators. They could care less; they only want the tax revenue.
March 22nd, 2012, 05:20 PM #6
Both CJ and LS have a physical presence in Ca. They collect funds from merchants and pay funds to affiliates. Legislators could just as easily create a legal fiction of a nexus by virtue of the network relationship as they have created a legal fiction of a nexus by virtue of the affiliate-merchant relationship.
This would be much harder to do, though not impossible, for the creative, fund-seeking political mind in states where networks have no physical presence. Again, they are expert in creating legal fiction.
March 22nd, 2012, 07:25 PM #7
- the Google has a presence in GA.
- Their "persons" reside in GA.
- Merchant pays for PPC ads shown in GA
- Merchants website appears in the Google SERPs (agreement is formed by the Google's TOS and it has been established that in exchange for being indexed the Google makes money off of the merchants' website being indexed and PPC (Adense) ads being contextually triggered by the merchant's website's content. If a merchant does not agree, they can block the Google from indexing their site and therefore not entering into an agreement.
By the above definitions, I would think the Google establishes a Nexus.
The Google needs to get their asses into the frey and protect their interests or merchants will stop advertising in locals where the Google has offices.
Just my thought process - I could be wrong...Salty kisses, Sandy toes, and a Pirate's heart...
March 22nd, 2012, 11:58 PM #8
To me this issues is simply solved by a merchant charging sales tax on every order based on the rate for their physical location. They pay to their local tax jurisdiction whether it be city, county or state. So if New York wants to sue me as a merchant selling and shipping products from my office in Park City Utah they have to sue me in Federal court. If they want to enforce sales tax for merchants in New York then that's their jurisdiction.
March 23rd, 2012, 11:51 AM #9
- Join Date
- March 4th, 2012
Frankly, I don't see the difference between Advertiser Services from major affiliate networks doing PPC versus affiliates doing PPC...
March 23rd, 2012, 12:36 PM #10
April 13th, 2012, 12:37 PM #11
- Join Date
- July 19th, 2011
I am not sure of all the business arrangements Google has. Nexus laws vary from state to state. What is true in one state may be different in another. But in general, some these items are considered in determining nexus:
- Physical presence (this usually creates nexus)
- Sales Reps (sometimes it does not matter if they live in the state or not as long as someone is soliciting sales into the state)
- Tradeshow sales (some states gets you on your first tradeshow sale, causing you to have to collect sales tax on all sales channels; online, etc)
- Affiliates (some states define a revenue threshold generated by affiliates to create nexus)
- Server location (if your server is in some state, gotcha)
- Warranty service (some states got you if someone in the state is servicing your warranty)
- Online sales. (not yet. Wait til Congress passes the internet sales tax later this year)
- Real estate rental in the state
Nexus rules are not general. If one needs to be sure about nexus, a study needs to be done on one's specific case on a state by state level. We perform nexus study for various clients. Many online sellers simply choose to charge and voluntarily remit sales tax to avoid liability since what is true today may expire tomorrow. That could be a smart business decision especially if Congress passes an internet sales tax law soon.
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