January 24, 2018 / North America
As established in Quill, nexus (the minimum presence for which a state can impose its taxing jurisdiction) for sales tax purposes is determined based on a taxpayer’s physical presence (e.g., property or personnel) located in a jurisdiction. As such, online retailers have traditionally only collected sales tax on sales to customers from states where they have a physical presence. By their very nature, many online sellers have very little physical presence in most states and are therefore not required to collect sales tax in many jurisdictions
Of course, given the explosive growth in e-commerce in the years since the Quill decision, many states believe that online sellers enjoy an unfair advantage over in-state retailers since they are not required to collect sales tax. Accordingly, states have tried, with mixed success, to attribute a physical presence to online sellers through the actions of others, including so-called “affiliate nexus” and “click-through nexus,” for example.
In 2017, however, Alabama…