If you're a Shopify business owner, you may have heard the term "click-through nexus" before. Click-through nexus is a term used to describe the relationship between an online retailer and a state in which the retailer does not have a physical presence but is still required to collect sales tax.
In short, click-through nexus is triggered when an out-of-state retailer (in this case, a Shopify business owner) has an agreement with an in-state business or individual (such as an affiliate) who refers customers to the out-of-state retailer's website through a hyperlink or other online connection. This agreement is commonly referred to as an affiliate or referral program.
When an out-of-state retailer enters into an affiliate or referral program with an in-state business or individual, the retailer may become subject to that state's sales tax collection requirements if the in-state business or individual exceeds a certain threshold of sales or referrals. This threshold varies by state but typically ranges from $10,000 to $100,000 in sales or a certain number of referrals within a 12-month period.
It's important to note that not all states have click-through nexus laws in place, and the laws that do exist can vary widely. As a Shopify business owner, it's important to be aware of these laws and monitor them closely, as they can change frequently.
If you do have a click-through nexus obligation, you will need to register with the state and collect and remit sales tax on all taxable transactions in that state. Failure to comply with click-through nexus laws can result in penalties and interest, so it's important to stay on top of your obligations.
One way to simplify the process of complying with click-through nexus laws is to use a sales tax automation software or service. These tools can help you accurately calculate sales tax rates and manage your sales tax collection and remittance obligations across multiple states. In conclusion, the click-through nexus is a complex issue for Shopify business owners, but it's important to understand and comply with the laws in the states where you have obligations.
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