(Thanks to Click-Through Nexus)
With the explosion of sales generated through social media in recent years, more and more ecommerce sellers, service providers, and small businesses are turning to social media influencers to promote their products.
Whether it’s a YouTube creator doing a product shout-out, or a TikTok influencer recommending an item followed by “check out my link in the description for 10% off,” we’ve all seen how powerful this marketing method can be. It’s a fantastic way to generate extra sales, but it can also create a hidden sales tax problem known as Click-Through Nexus.
In this article, we’ll break down what it is, which states still enforce it (as of November 2025), and how your influencer strategy could trigger new tax obligations.
What Is Click-Through Nexus?
This type of tax nexus occurs when a retailer compensates in-state individuals, influencers, or businesses for referring customers via affiliate marketing links, promo codes, or other trackable referrals, and the total referred sales exceed a certain threshold.
In simple terms, if you pay someone located in a state to drive sales through their online content and those sales surpass the state’s limit, that state may consider your business to have nexus, meaning you must register, collect, and remit sales tax there.
Example:
If a Tennessee influencer earns commissions on sales to Tennessee customers totaling more than $10,000 in a 12-month period, your business may now have sales tax nexus in Tennessee, even if you have no physical presence there.
Why? Because states see those influencers not as passive advertisers but as in-state solicitors: individuals actively helping generate taxable sales.
States With Active Click-Through Nexus Rules (as of November 2025)
| State | Threshold (click-through referrals) |
| Connecticut | > $100,000 in referral sales in the preceding four quarters |
| Georgia | > $50,000 in referral sales in the preceding 12 months |
| Idaho | > $10,000 in referral sales in the preceding 12 months |
| Illinois | ≥ $10,000 in referral sales in the preceding four quarters (re-enacted 1/1/2020) |
| Iowa | > $10,000 in Iowa-sourced referral sales |
| Michigan | > $10,000 in referral sales and > $50,000 total Michigan sales in 12 months |
| Minnesota | > $10,000 in referral sales during the most recent 12-month period |
| Nevada | > $10,000 in referral sales in the preceding four quarters |
| New Jersey | > $10,000 in referral sales in the preceding four quarterly periods |
| New York | > $10,000 in referral sales in the preceding four quarterly periods |
| North Carolina | > $10,000 in referral sales in the preceding four quarters |
| Pennsylvania | No de minimis threshold – any compensated referral may trigger nexus |
| Rhode Island | > $5,000 in referral sales in the preceding four quarters |
| Tennessee | > $10,000 in referral sales in the preceding 12 months |
| Vermont | > $10,000 in referral sales in the preceding tax year |
| Louisiana | > $50,000 in referral sales in the preceding 12 months |
Note: Some states (like California, Maine, Missouri, and Kansas) previously had click-through nexus laws but repealed them after adopting broader economic nexus standards.
Compliance Challenges
Tracking and managing click-through nexus risk can be surprisingly complex for your marketing push:
- Influencer locations aren’t always clear or disclosed.
- Definitions differ by state, making compliance inconsistent.
- Cumulative thresholds can be crossed without realizing it if multiple influencers operate in the same state.
- Affiliate sales attribution data is often siloed between your marketing platform and your tax system.
Without proper tracking, it’s easy to unknowingly create nexus in multiple states and face back-tax exposure later.
The Right Software Is Essential
If your business uses affiliates or influencers, invest in a solid affiliate-tracking platform that can:
- Capture affiliate location and residency (to identify which state’s laws apply).
- Assign unique tracking links or promo codes to each influencer.
- Produce sales-by-affiliate and sales-by-state reports for nexus monitoring.
Platforms like Refersion, Post Affiliate Pro, Tapfiliate, or impact.com allow you to onboard affiliates, log their addresses, and measure their referred sales (critical data for sales tax compliance).
Once the Click-Through Nexus Is Reached
If you determine that your referral sales have exceeded a state’s threshold:
- Register with the state’s Department of Revenue for sales and use tax.
- Collect and remit sales tax on taxable transactions.
- File returns according to the frequency assigned (monthly, quarterly, or annually).
- Maintain records of your affiliate agreements and sales totals in case of an audit.
Failing to register once nexus exists can lead to penalties, interest, and retroactive tax assessments.
Commission vs. Flat-Fee Arrangements
One way to reduce the risk of triggering click-through nexus is to avoid commission-based payments and instead pay influencers a flat promotional fee for their marketing efforts.
Flat fees are treated as advertising expenses, not performance-based commissions, so they typically don’t meet the definition of a “referral relationship.”
However, top influencers often charge higher flat rates when commission isn’t an option. Consider your margins, risk tolerance, and brand exposure before deciding.
Final Thoughts
Influencer and affiliate marketing are powerful tools for growth, but they can also expand your tax footprint faster than you realize.
By tracking where your affiliates are based and monitoring how much business they generate in each state, you can stay ahead of compliance risks and avoid painful surprises.
Need Help Managing Sales Tax Nexus?
If your business works with influencers, affiliates, or referral programs, RJM Tax Exemption can help you identify where you’ve triggered nexus and handle registration, filings, and ongoing compliance. Contact RJM Tax Exemption today to protect your business and keep your influencer strategy tax-safe.
