Skip to main content
IMA Tax Policy Blog

Illinois adopts click-through nexus rules

Provides guidance on rebutting nexus presumption . . .

RSM TAX ALERT | September 27, 2016

On Sept. 12, 2016, the Illinois Department of Revenue (DOR) adopted final rules pursuant to the state’s amended click-through nexus statute. The new rules provide guidance on rebutting the presumption that an agreement with an in-state person establishes nexus for a remote retailer.


In 2008, New York State enacted the first click-through nexus statute, followed by almost two dozen states enacting their own versions. Click-through laws generally provide that a remote internet retailer is presumed to have sales and use tax nexus in the state if the retailer enters into an agreement with an in-state person to refer potential customers to the retailer via a link on the in-state person’s internet website, in exchange for consideration paid to the in-state person. Generally, the presumption applies only if the retailer has gross receipts in excess of a certain amount from sales to in-state customers resulting from such agreements during the preceding four quarterly periods.

In 2011, Illinois enacted a click-through nexus statute that, while modeled after New York state’s law, included several significant differences, such as a lack of a rebuttable presumption that nexus was established due to an agreement with an in-state party. The statute was quickly challenged and, in October 2013, the Illinois Supreme Court held that the click-through nexus law was preempted by the federal moratorium on discriminatory taxes on electronic commerce under the Internet Tax Freedom Act because the law did not apply to agreements with Illinois print or over-the-air broadcasters.

The Illinois legislature subsequently redrafted the click-through statute, intending to cure the discrimination found in the original law. The revised law, effective Jan. 1, 2015, provided for the opportunity to rebut the presumption that was not found in the original law. For more information on the amended statute, please read our alert, Illinois amends click-through nexus law.

Click-through rules

The DOR’s revised rules provide remote retailers with click-through agreements with Illinois persons a procedure to rebut the presumption. Accordingly, the remote retailer must: 1) have an agreement with an in-state person that prohibits those persons from engaging in any solicitation activities in Illinois that refer potential customers to the retailer, including, but not limited to distributing flyers, newsletters, promotional materials, telephone calls or emails, and 2) annually certify that persons operating under the agreement have not engaged in any prohibited solicitation activities in Illinois at any time during the previous year. The retailer agreement must be maintained in the retailer’s records and be made available to the DOR for inspection or audit. The annual certification must be completed on forms prescribed by the DOR.

The new rules also define advertising and solicitation, providing definitions that clearly bifurcate those activities. The department defines advertising as a written, verbal or graphical announcement of goods or services for sale, intended to communicate that information to the general public. Online advertising as a result of generic algorithmic functions that is anonymous and passive in nature is considered advertising and not solicitation. Solicitation is defined as a direct or indirect communication to a specific person, including emails or text messages, intended to incite a person to purchase tangible personal property from a retailer.

Finally, the DOR’s rules provide several examples distinguishing advertising from solicitation for purposes of determining whether the presumption can be rebutted.


Over 20 states have adopted click-through nexus laws, and while most of those laws include a provision to rebut the presumption that nexus is established through a click-through agreement, few of the states explain what steps a taxpayer should take in order to rebut that presumption. The new Illinois rules provide taxpayers with a concrete procedure for rebutting the presumption, although taxpayers should note that the procedure requires annual certification that in-state activities do not rise to the level of prohibited solicitation. Additionally, the Illinois rules may provide insight on rebutting the presumption in other click-through states that have not yet provided guidance on doing so. Remote retailers engaging in click-through agreements should discuss appropriate record keeping in regards to those agreements with their tax advisors.

Source: IMA member RSM