Ohio Governor Vetoes Click-Through Nexus

Although included in the version passed by the Ohio General Assembly, Governor Kasich vetoed click-through nexus provisions from Ohio’s Budget Bill signed Sunday night. Similar laws have been enacted in several other states presuming sales/use tax nexus to exist if a company enters into agreements with instate “affiliates” or representatives to refer sales, including via weblinks, in exchange for a commission – aimed at programs made popular by online retailers, such as Amazon and Overstock. Kasich stated that such laws “enacted in other states have resutled in extensive litigation without necessarily producing an increase in state revenue… Without the collection authority being clearly extended to the states for the purpose of out-of-state internet retailers, the legality of this item is uncertain and problematice. Congress must act before this policy change may become viable.” See Statement of Reases for the Veto of Items in Amended Substitute House Bill 59, at p. 6 (June 30, 2013).

This reflects the Ohio executive branch’s belief that it does not have the authority to impute nexus in the absence of such legislation (state or federal). This is contrary to revenue deparments in other states which have administratively imposed click-through nexus without a specific statute. See e.g., Pennsylvania Dep’t of Revenue Sales and Use Tax Bulletin 2011-01 (Dec. 1, 2011). Governor Kasich’s action is consistent with his administration’s business friendly tax policy.