Affiliate Nexus Tax Laws: What's an Online Retailer to Do?

When nexus tax laws are enacted, online retailers that offer an affiliate marketing program are faced with a difficult choice:

1. begin collecting sales tax on purchases made in each state that enacts an affiliate nexus tax (at each state's individual rates); or
2. sever ties with affiliate marketing partners in each state that's enacted an affiliate nexus tax, thereby forfeiting the revenue generated by such programs.

The first choice requires that you understand and stay current with the tax codes in each state that enacts these laws, as well as modify your checkout process by implementing specific tax rates and regulations for each state.