While most states that have “click-through nexus” sales tax laws have issued little to no guidance addressing the scope of their provisions, the Pennsylvania Department of Revenue (Department) issued guidance explaining the types of payment mechanisms that will trigger nexus.

The Department’s ruling supplements a December 1, 2011 Tax Bulletin (Tax Bull. 2011-01) issued by the Department. For purposes of Pennsylvania’s “click-through nexus” provision, the Tax Bulletin interpreted “maintaining a place of business” to include a remote seller who contracts with an in-state entity or individual located in Pennsylvania whose website has a link that encourages purchasers to place orders with the remote sellers and where the in-state entity or individual receives consideration for the contractual arrangement.

In a letter ruling issued to the Performance Marketing Association on August 28, 2012, the Department stated that remote sellers do not have a “click-through” sales tax collection obligation if the remote seller pays an in-state entity or individual based on the effective placement of online advertising and not based on a percentage of sales. The Department’s conclusion in its August 28 ruling reflects an important consideration in evaluating state “click-through” provisions—the method of consideration in a “click-through” arrangement may determine whether the out-of-state seller falls within the state’s tax collection regime.