On August 28th, the PA Department of Revenue ruled that the presence of an instate affiliates will not create nexus for the out-of-state seller unless there is a commission paid by the out-of-state seller for the services performed by the in-state affiliate. This is especially true where the commission is based as a percentage of sales. While the state is trying to tie this “commission based” nexus rule to the recently passed Amazon laws in other states, the truth of the matter is that any commission based agent will create nexus for the out of state principal.
There may be a lot of internet sellers who are only monitoring the development of the “Amazon” legislation and are not really paying attention to the traditional nexus rules. These would include the presence of property in a state. In many situations, the out-of-state e-tailers use Amazon and other “fulfillment” centers for delivery of goods that are ordered. In these cases, the e-tailer may actually ship property to the fulfillment center and then pay a fee for fulfillment. The presence of this property in the state will, in most cases, create nexus in most state and create a sales tax collection responsibility for all the sales shipped to that state by the e-tailer regardless where they were shipped from.
Ned Lenhart, CPA
President