In a popular move by states these days, Connecticut has introduced legislation addressing Affiliate Nexus.

If passed, remote sellers with a brick and mortar affiliation in the state would be required to collect sales tax on sales into Connecticut . The legislation would amend Connecticut’s definition of doing business in the state to include processing orders electronically, by fax, telephone, Internet, or other electronic ordering, or processing orders by non-electronic means, by mail order, fax, telephone, or otherwise if the person or persons processing the orders:

1. has a substantial ownership, either directly or through a subsidiary , in the retailer that has a physical sales location in the state, or is owned wholly or substantially by such a retailer , or by a parent or subsidiary of such a retailer; and
2. the processor of the order sells the same or substantially the same line of products that the retailer does under the same or a substantially similar name, or the location and/or employees of that retailer are used to promote or advertise sales by the order processor to prospective Connecticut consumers.

The legislation (H.B. 6965) would be effective for sales occurring on or after October 1, 2005.

If you would like additional information on this topic or have any questions, please contact the taxdesk@thesaltgroup.com