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  1. #1
    ...and a Pirate's heart. Convergence's Avatar
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    What 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 ? Company
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  2. #2
    Beachy Bill's Avatar
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    ...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)
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  3. #3
    Influencer Marketing GravityFed's Avatar
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    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.

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  5. #4
    Super Dawg Member Phil Kaufman aka AffiliateHound's Avatar
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    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.
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  6. #5
    Affiliate Network Rep JCrooks - AffiliateWindow's Avatar
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    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.

  7. #6
    Super Dawg Member Phil Kaufman aka AffiliateHound's Avatar
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    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.
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  8. #7
    ...and a Pirate's heart. Convergence's Avatar
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    Quote Originally Posted by JCrooks - buy.at View Post
    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.
    Let's use GA for an example:

    Quote Originally Posted by new_jersey_nexus View Post
    Found the bill and legalese.

    http://www.legis.ga.gov/Legislation/20112012/125426.pdf

    1755 PART VI
    1756 SECTION 6-1.

    1853 (M)(i) Enters into an agreement with one or more other persons who are residents of
    1854 this state under which the resident, for a commission or other consideration, based on
    1855 completed sales, directly or indirectly refers potential customers, whether by a link
    1856 on an Internet website, an in-person oral presentation, telemarketing, or otherwise, to
    1857 the person, if the cumulative gross receipts from sales by the person to customers in
    1858 this state who are referred to the person by all residents with this type of an agreement
    1859 with the person is in excess of $50,000.00 during the preceding 12 months.
    1860 (ii) The presumption that a person described in this subparagraph is a dealer in this
    1861 state may be rebutted by submitting proof that the residents with whom the person has
    1862 an agreement did not engage in any activity within this state that was significantly
    1863 associated with the person's ability to establish or maintain the person's market in the
    1864 state during the preceding 12 months. Such proof may consist of sworn written
    1865 statements from all of the residents with whom the person has an agreement stating
    1866 that they did not engage in any solicitation in this state on behalf of the person during
    1867 the preceding year, provided that such statements were provided and obtained in good
    1868 faith. This subparagraph shall take effect 90 days after the effective date of this Act
    1869 and shall apply to sales made, uses occurring, and services rendered on or after the
    1870 effective date of this subparagraph without regard to the date the person and the
    1871 resident entered into the agreement described in this subparagraph;

    1974 (c) Section 6-1 of this Act shall become effective on October 1, 2012

    IE:
    • 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...
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  10. #8
    OPM and Moderator Chuck Hamrick's Avatar
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    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.

  11. #9
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    Frankly, I don't see the difference between Advertiser Services from major affiliate networks doing PPC versus affiliates doing PPC...

  12. #10
    ...and a Pirate's heart. Convergence's Avatar
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    Quote Originally Posted by new_jersey_nexus View Post
    Frankly, I don't see the difference between Advertiser Services from major affiliate networks doing PPC versus affiliates doing PPC...
    Can you clarify: Advertiser Services from major affiliate networks?
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  13. #11
    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

    • Others.


    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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