West Virginia and Kansas recently enacted legislation adding affiliate nexus provisions to their state codes. Kansas also enacted "click through" nexus provisions. West Virginia's provisions will apply beginning January 1, 2014. Kansas's provisions will apply beginning July 13, 2013.
The West Virginia legislation increases the number of retailers that are required to collect West Virginia use tax. West Virginia requires a "retailer engaging in business in this state" to collect West Virginia use tax. The legislation expands the definition of "retailer engaging in business in this state" to include any retailer that is related to, or part of a unitary business with an entity that meets one of four requirements. These requirements are that (a) pursuant to an agreement with or in cooperation with the related retailer, the entity maintains a place of business in West Virginia; (b) the entity performs services in West Virginia in connection with tangible personal property or services sold by the retailer or any other related entity; (c) the entity, by agent, representative, or employee performs services in West Virginia in connection with tangible personal property or services sold by the retailer or any related entity; or (d) the entity solicits business in West Virginia for or on behalf of the retailer or related entity.
Kansas's provisions will require more retailers to register to collect Kansas tax by creating rebuttable presumptions that certain retailers are "doing business" in Kansas. First, this presumption applies to a retailer when (1) a Kansas resident refers customers to the retailer and (2) the retailer's gross receipts from Kansas sales exceed $10,000 in the past 12 months. Second, this presumption applies when a retailer has an affiliate with physical presence in Kansas or an employee or agent with sufficient nexus to require that employee or agent to collect and remit Kansas sales tax. Third, this presumption applies when any person with sufficient nexus to Kansas to be required to collect and remit Kansas sales tax does one of the following:
(a) uses trademarks, services marks, or trade names in Kansas that are the same or substantially similar to those used by the retailer;
(b) delivers, installs, assembles, or performs maintenance services for the retailer's customers within Kansas;
(c) facilitates the retailer's delivery of property to customers in Kansas by allowing the retailer's customers to pick up said property at an office, distribution facility, warehouse, storage place, or similar place of business in Kansas; or
(d) conducts any other activities in Kansas that are significantly associated with the retailer's ability to establish and maintain a market in Kansas for the retailer's sales.