Seven Years Later: New Nevada Affiliate Tax Rules

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Nevada Affiliate tax rules

On October 1, 2015 non-Nevada retailers who have Nevada affiliates will be required to collect sales tax on sales to Nevada residents. The law is modeled after the infamous New York law that spurred lawsuits, shut down businesses and just generally caused a lot of hang wringing by online merchants.

This law, years later, has had almost no impact at all. Affiliates didn’t lose their business. Nevada corporations didn’t flee the state. There was barely a ripple in the industry.
What happened?

By now, most businesses are used to collecting and paying sales tax. Amazon has warehouses across the country and they realize that alone means they have nexus in a lot of other locations. People who sell through FBA (fulfilled by Amazon) have also realized that they are responsible for understanding nexus and when they have to collect sales tax in multiple states. In fact, Amazon is doing a great job of educating their sellers.

Controlled Groups Create Nexus in Nevada

Nevada also enacted an affiliate nexus law, along the same lines as law put into place a few years ago in Colorado. Starting on July 1, 2015, a non-Nevada retailer will be considered a Nevada retailer for sales taxes if it is part of a controlled group of companies and any member of that group engages in any of the following activities:

  • Sells a similar line of products or services as the retailers and does so under a business name that is the same or similar to that of the retailer;
  • Maintains an office, distribution facility, warehouse or storage place or similar place of business in Nevada to facilitate the delivery of tangible personal property sold by the retailer to its customers;
  • Uses trademarks, service marks or trade names in Nevada that are the same or substantially similar to those used by the retailer;
  • Delivers, installs, assembles or performs maintenance services for the retailer’s customers within Nevada;
  • Facilitates the retailer’s delivery of tangible personal property to customers in Nevada by allowing the retailer’s customers to pick up tangible personal property sold by the retailer at an office, distribution facility, warehouse, storage place or similar place of business maintained by the component member in Nevada; or
  • Conducts any other activities in Nevada that are significantly associated with the retailer’s ability to establish and maintain a market in the state for the retailer’s products or services.

What is the end result of all of this for your business? Pay attention to where and when your customers are and talk to your CPA. Just because you don’t collect sales tax, it doesn’t mean you don’t have to pay it.

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