Ohio Budget Bill Enacts Click-Through Nexus

August 05, 2015

With the signing of the fiscal year 2016-2017 budget by Ohio Governor John R. Kasich comes click-through nexus provisions.  These provisions are effective July 1, 2015.  A presumption is provided that a seller will have substantial nexus in Ohio if the seller enters into an agreement with an instate resident, who for a commission or other consideration, refers potential customers by a link on a website, in-person oral presentation, etc., to the seller.
In order to meet this presumption, the out-of-state seller must have cumulative gross receipts from sales to customers in Ohio via referral from the instate resident greater than $10,000 during the immediate 12 preceding months.    There are provisions enacted that allow an out-of-state seller to rebut this presumption if they believe that the resident with whom the seller had an agreement did not engage in activities that were significantly connected with the seller’s ability to establish and maintain a market in Ohio and/or if the activities did nothing to establish or maintain a market in Ohio.

This legislation further increases the criteria for determining substantial nexus to include:

  1. Use of employees, agents or others to sell a similar line of products or use similar trade names or trademarks as the seller.
  2. Use of any person, except for a common carrier, to promote, advertise, facilitate customer sales, or perform maintenance, delivery, and installation services for the seller’s Ohio customers or facilitate delivery by allowing customers to pick up property sold by the seller.

This legislation also revokes the following criteria as a basis for a presumption of substantial nexus:

  1. A seller’s registration to do business in Ohio; and
  2. Any other contact with Ohio that forms the basis of substantial nexus as permitted under the U.S. Constitution’s Commerce Clause.

For more information and details, including other changes enacted by the budget, click here.

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