Understanding Affiliate and Click-Through Nexus in a Post-Wayfair World

Understanding Affiliate and Click-Through Nexus in a Post-Wayfair World

Before the Supreme Court’s South Dakota v. Wayfair decision reshaped the landscape of sales tax, states were already looking for ways to ensure that businesses benefitting from in-state sales also took on the responsibility of collecting sales tax. One strategy they used involved what’s known as “affiliate nexus” or “click-through nexus.”

So what do those terms mean today—and do they still matter? In short: yes, they do.

What is Affiliate Nexus? What is Click-Through Nexus?

Affiliate nexus refers to a situation where a business establishes a taxable presence in a state not by operating there directly, but through third parties—affiliates—who help promote or sell its products. These affiliates might earn a commission or fee based on the sales they help generate.

Let’s say Ellie runs a skincare brand called GlowOn, known for its all-natural serums. Her products start gaining attention thanks to beauty bloggers and social media influencers who rave about their results. To ride that momentum, Ellie launches an affiliate program where creators earn a percentage of each sale that comes from their referrals.

Even though Ellie doesn’t have an office, warehouse, or employees in certain states, the affiliates promoting her products do live there. That connection—those affiliates acting on behalf of her business—can be enough to establish nexus in those states, creating a responsibility to collect and remit sales tax.

Click-through nexus works similarly but is focused on digital referrals. For example, if an influencer includes a tracked link to GlowOn on their blog or Instagram page and a customer makes a purchase through that link, that click could create a taxable connection if the influencer is based in a state that enforces click-through nexus rules.

Click-through nexus is a subset of affiliate nexus that specifically involves online activity. When a consumer clicks a link from an affiliate’s website and makes a purchase, that “click-through” can trigger a sales tax obligation if the affiliate is located in a state with relevant nexus laws. But affiliate relationships don’t have to be digital—offline demonstrations and referrals can count too.

Why It Still Matters After Wayfair

While Wayfair introduced the concept of economic nexus—typically tied to revenue or transaction count—many states haven’t abandoned older nexus rules. In fact, affiliate nexus is often easier to trigger than economic thresholds. Some states consider affiliate sales as low as $10,000 enough to require sales tax collection, and Pennsylvania has no minimum threshold at all.

That means even one affiliate-based sale in Pennsylvania could require your business to collect and remit sales tax for all buyers in the state, regardless of the channel they buy from.

How We Help

If your business uses affiliates, it's essential to stay on top of the nexus rules that might still apply. At Taxiom, we help you stay compliant with these lesser-known, but still very active, laws. We'll evaluate your affiliate relationships and make sure you're registered and collecting sales tax wherever needed.