The Arizona Court of Appeals recently found that a nationwide auto parts online retailer had established substantial nexus in Arizona through its distributors. The online auto parts retailer is based in Wisconsin and has distributors located in Arizona. The Arizona distributors supply, ship, and facilitate returns for the online retailer’s customers in Arizona. The Arizona Department of Revenue argued that the online retailer’s use of distributors creates substantial nexus in Arizona. The Arizona Court of Appeals agreed noting that the distributors acted on behalf of the online retailer, much like an independent contractor. The online retailer is compelled to register and collect Arizona sales tax due to its use of distributors in the state of Arizona.
If you have any questions, please contact Gary Schleinkofer at 260-969-2576.
