Affiliate and Click-Through Nexus: How Online Partnerships Create Sales Tax Obligations

Affiliate nexus arises when a business uses in-state partners — affiliates, resellers, or agents — to refer customers or facilitate sales, and that relationship is sufficient under state law to create a tax collection obligation. The logic is straightforward: if someone in a state is actively helping you sell to that state's residents, the state considers you to have a taxable presence there.

Before the Supreme Court's 2018 Wayfair decision expanded economic nexus nationwide, affiliate nexus was one of the primary tools states used to capture tax revenue from remote sellers. Even after Wayfair, affiliate nexus laws remain on the books in many states and can create obligations independent of economic nexus thresholds. That means you could owe sales tax in a state where you fall below the economic nexus dollar or transaction threshold, simply because an affiliate in that state is sending you traffic or leads.

Affiliate relationships that commonly trigger nexus include commission-based referral programs, in-state representatives who solicit sales on your behalf, fulfillment partners or drop-shippers located in the state, and marketing agents who distribute coupons, discount codes, or promotional materials to in-state customers.

Click-through nexus is a specific type of affiliate nexus that targets online referral relationships. It was pioneered by New York in 2008 — earning the nickname "Amazon tax" — and has since been adopted by roughly two dozen states. The core idea is that when an in-state website owner places a link on their site that directs visitors to your online store, and you pay that person a commission on resulting sales, the state treats that in-state website owner as your sales representative. That referral relationship creates nexus for you.

The typical statutory framework works like this: if a remote seller enters into an agreement with an in-state resident under which the resident refers potential customers to the seller via a link on the resident's website, and the seller pays a commission or other consideration for those referrals, and cumulative gross receipts from those referred sales exceed a specified threshold over a trailing twelve-month period, then the seller is presumed to have nexus in that state.

The key word is "presumed." In most states, click-through nexus creates a rebuttable presumption. A seller can overcome the presumption by demonstrating that the in-state affiliate did not engage in any solicitation activity on the seller's behalf during the relevant period. In practice, though, rebutting this presumption is difficult because affiliate programs are inherently designed to solicit sales.

As of early 2026, the following states have enacted click-through nexus provisions: New York, California, Illinois, Arkansas, Connecticut, Georgia, Kansas, Louisiana, Maine, Michigan, Minnesota, Missouri, New Jersey, North Carolina, Ohio, Pennsylvania, Rhode Island, Tennessee, Vermont, Washington, and Wisconsin. Several other states have introduced similar bills that may be enacted in the near future.

Thresholds vary by state but typically fall in the range of $10,000 to $50,000 in cumulative referred sales over a twelve-month period. New York, for instance, sets the bar at $10,000 in gross receipts from click-through referrals over the prior four quarterly periods. California uses a $10,000 threshold as well. Illinois requires $10,000 in cumulative gross receipts, while Connecticut sets its threshold at $2,000 in gross receipts during the preceding twelve months — one of the lowest in the country.

It is important to note that some states that initially passed click-through nexus laws — including Illinois — had those laws challenged in court or temporarily blocked before Wayfair. Post-Wayfair, many of these states now rely more heavily on economic nexus statutes, but the click-through provisions remain part of the statutory landscape and can still independently trigger obligations.

A common question businesses ask is whether they need to worry about affiliate nexus if they are already tracking economic nexus thresholds. The answer is yes. These are independent tests. You can have nexus under one, both, or neither.

Consider this scenario: you sell software subscriptions online. You have an affiliate program with bloggers across the country who link to your product in their reviews and earn a 10 percent commission. In State A, your total sales are $80,000 — below the $100,000 economic nexus threshold. But $15,000 of those sales came through an affiliate based in State A. If State A has a click-through nexus law with a $10,000 threshold, you now have nexus in State A through the click-through provision even though you do not meet the economic nexus standard.

The reverse is also true. If you hit the economic nexus threshold in a state, you have nexus regardless of whether any affiliates are involved. The practical effect is that affiliate and click-through nexus laws widen the net. They pull in sellers who might otherwise fly under the economic nexus radar.

For businesses with active affiliate programs spanning dozens of states, this dual-track analysis adds meaningful complexity to compliance planning. You need to monitor both economic activity levels and affiliate-driven sales in every state where you have referral partners.

Start with a nexus study. Before you can manage compliance, you need to know where you have obligations. A thorough nexus study maps your affiliate relationships state by state, identifies which states have click-through or affiliate nexus provisions, calculates your referred sales against each state's threshold, and produces a clear picture of where you need to register and collect tax.

Next, review your affiliate agreements. Your contracts with affiliates should include provisions that address tax compliance. At a minimum, require affiliates to disclose their state of residence and business location. Some businesses include clauses that allow them to terminate affiliate relationships in specific states if the compliance burden outweighs the revenue — a strategy that has been used to avoid triggering click-through nexus in certain jurisdictions.

Register for sales tax permits in every state where you have nexus. Collecting sales tax without a valid permit is illegal in most states, and selling into a state where you have nexus without collecting tax exposes you to back-tax assessments, penalties, and interest. If you have historical exposure — meaning you should have been collecting tax in a state but were not — consider a voluntary disclosure agreement before registering. Many states offer reduced or waived penalties through VDA programs.

Finally, implement systems to track affiliate-driven sales on an ongoing basis. Your affiliate platform should be able to report gross receipts by affiliate location. Pair that data with a compliance calendar to ensure you are monitoring thresholds and filing returns on time in every obligated state.

Affiliate and click-through nexus compliance sits at the intersection of tax law, e-commerce operations, and multi-state regulatory requirements. The rules differ from state to state, thresholds change, and the interaction between affiliate nexus and economic nexus requires careful analysis.

If your business operates an affiliate program with partners in more than a handful of states, or if you are unsure whether your existing affiliate relationships have already created unfiled obligations, working with a nexus tax specialist is the most efficient path to compliance. At Nexus Accountant, we conduct detailed nexus studies that account for all nexus types — economic, physical, affiliate, and click-through — and we help businesses register, remediate past exposure through voluntary disclosure agreements, and build ongoing compliance systems that keep pace with their growth.