On June 5, Maine Governor Paul LePage approved legislation that implements click-through nexus and affiliate nexus provisions for purposes of the state's sales and use tax.1 The click-through nexus provision creates a presumption of nexus for out-of-state sellers that have an agreement to pay a Maine resident for providing a link to the seller's Web site. The affiliate nexus provision creates a presumption of nexus for out-of-state sellers if an affiliate has a substantial physical presence in the state. Also, the provision creates a presumption of nexus if a person has a substantial physical presence in the state and engages in certain activities for the seller. Further, the legislation amends and clarifies the existing substantial physical presence requirement necessary to subject sellers to Maine sales and use tax. The provisions are effective 90 days after the Maine legislature adjourns.2
An out-of-state seller is presumed to be engaged in the business of selling tangible personal property or taxable services for use in Maine if the seller enters into an agreement with a person in Maine under which the person, for a commission or other consideration, directly or indirectly refers potential customers, whether by a link on an Internet Web site, by telemarketing, by an in-person presentation or otherwise, to the seller.3 Also, the cumulative gross receipts from retail sales by the seller to customers in Maine who are referred to the seller by all persons with this type of agreement with the seller must exceed $10,000 during the preceding 12 months.4 A seller that meets these requirements must register with the state and collect and remit taxes. However, a person who enters into an agreement with a seller to refer customers by a link on an Internet Web site is not required to register or collect taxes solely because of the existence of the agreement.5
The click-through nexus provision applies to sales made, uses occurring and services rendered on or after the effective date of the legislation regardless of when the seller and the person entered into the agreement.6 However, when calculating the 12-month period for purposes of determining whether the $10,000 threshold has been met, the 12-month period begins one year immediately preceding the seller's registration with the state as a retailer.
An out-of-state seller may rebut the presumption of nexus by submitting proof that the person with whom the seller has an agreement did not engage in any activity within Maine that was significantly associated with the seller's ability to establish or maintain the seller's market in Maine during the preceding 12 months.7 The proof may consist of sworn, written...