It’s a sign of troubled economic times. Politicians everywhere around the US are searching high and low for new and innovative sources of taxation to balance their budgets and offset their deficits. While this “innovative legislation” may seem well intentioned, especially when claims of millions of dollars in tax revenues are at stake, the real truth is you can’t just indiscriminately take money from one place and give to another without causing harm to somebody in the middle.
It’s no suprise that several affiliate marketing industry leaders have been blogging about upcoming California Assembly Bill 178 which could have dire consequences for the affiliate marketing industry as well as for internet retailers :
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California has a pending bill, copying a similar one in New York, unfairly categorizing publishers as sales presence for out-of-state advertisers. This means taxes will be levied on out-of-state advertisers, potentially causing them to shut down their publisher relationships in the state (it happened in New York). |
The Performance Marketing Alliance is leading the fight against this bill which threatens to set precedent for several other states if California allows it to move forward.
Linda Buquet at 5 Star Affiliate Blogs posted an urgent update regarding Bill SF 282 already on the books in the state of Minnesota which has made it to the Senate level with a hearing scheduled for this week. Connecticut, Hawaii and Tennessee also have similar sales tax legislation pending and it would seem logical that other states will not follow far behind in the cash grab.
Last year I was not just taken back, I was completely dumbfounded when I read about the “Amazon Tax” bill that had been proposed in New York. Many called the portion of the tax bill specifically targeting affiliate marketers unconstitutional but it struck me as bizzare that lawmakers could be so reckless :
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Specifically, the new law says that a retailer must collect sales tax from residents if any New York-based web site earns referral payments from Amazon (by running ads for Amazon on their web sites, by offering Amazon product referral links, or by being an Amazon affiliate). According to the statute, Amazon would need to collect sales tax on every purchase made by a New York resident through the site, regardless of whether it was bought from a New York-based affiliate. |
Take a scenario where an internet user in New York visits a New york based Amazon affiliate’s site, clicks a link to amazon and buys something !!
Could this short sighted legislation potentially set precedent for other states? Unless one of your state representatives has an Amazon Associates account and know how to build landing pages, affiliate marketers everywhere should take notice of this legislation and write your state and local representatives expressing your fear that similar legislation may be on the books in your state. You can find your representatives at house.gov.
Although this subject is no laughing matter, it might leave you with a smirk on your face to know that this legislation was first proposed by former New York Governor Eliot Spitzer who resigned his post after a federal wiretap caught him with a $1000 per hour call girl.
Does that mean the state of New York would be taxing a purchase from Amazon 2x if a resident buys from an affiliate in the state?
Take notice libeals. All the states mentioned are blue states?
You have your boy Obama and the Democrats to thank for these tax and spend tactics.
California Assembly Bill 178 - Could it Set Precedent for an Affiliate Tax?…
California has a pending bill unfairly categorizing publishers as sales presence for out-of-state advertisers. This means taxes will be levied on out-of-state advertisers, potentially causing them to shut down their publisher relationships in the state…
I think the government has been trying to find a way to collect taxes from online purchases for a long time now. This is a really poor time for them to be doing it with the economy so poor right now.
Will this bill impact eBay shop owners? Will they have to collect taxes on sales? I really don’t understand how this is all supposed to work. Can someone please clarify?
With all of the US affiliates out of the way it will be a field day for the rest of the world. I would think they would be trying to stimulate sales in the US now but they tank the economy.
Just what we need, another confusing attempt to hike up taxes and take more. This is crap! Everyone needs to get off your collective behind and send something to your local legislature. We don’t need this!
I had a feeling something like this was going to happen. It is only a matter of time before they tax everything on the Internet.
does this mean they can charge a tax for eBay sales???
Well taxing on the internet i would love to see, i thinks its hard to “take out” a law like this.
As I was reading through I found his incredibly concerning till I got to the end. Thats brilliant as he was caught.
I think this gives us an air of relief, still I find it quite concerning that they are even considering this, it’s hard to enough to earn from amazon as it is, so when you do make those few sales you really need the money from them.
Governments already rob us enough as it is
I know this would happen:-(
Thanks for sharing with us!This article is great.It let me understand more about the current situation.
Lovely…. I had hoped it wouldn’t come to this. :/
I am not surprise, every level of governments are broke, money has to come from somewhere. things can only get worst. the average joes will be paying for it.
Crap, I hope they don’t pass an Affiliate Tax. That would totally screw us all over. (I know that’s a “Captain Obvious” statement, but I wanted to say it anyways lol)
I don’t think tax is good idea . if they made it it should be for the companies not individuals .
I just hope this crisis will end soon because I just start my affiliate business and I dont want it to get in my way
I don’t like the thought of this, seems like taxation without representation. Thanks for the info, I hope other states don’t follow suit.
Well well well. Here it begins. We provide benefits to illegal aliens, hire more government employees than ever before, then turn around and tax the crap of the few working American’s who pay their taxes. But you can be sure that some illegal alien is getting an excellent eduction for his child in our public schools including free English language classes and, in many states, a free college education. Something none of my four kids received from their government that they are now paying more and more taxes to. Gotta love it. Go Obama Go!
It’s about time this is a much needed bill to protect small business. Local CA companies are losing sales to out of state companies just because of sales tax everyday. If a youth league that spends $30000 a year in uniforms and equipment is getting bids online,their local store loses the bid by almost $3000 just because we have to pay sales tax….unfair.
Not only does the state lose the sales tax, with small companies sales declining they also lose income tax.
Sporting Goods Store Owner
So this means that sales by affiliates not residing in those states are unaffected? But sales by affiliates residing in those states will be taxed?
I live outside of the US. If every US state enacts a similar law, does that mean advertisers will start relying on international publishers more? Interesting.
From how I read it only affiliates in the affected states (ie: NY, CA, MN) will be subject to these new taxes.
Sales tax legislation is very tricky business. However, a variety of states are moving towards new and improved streamlined sales and use tax laws, and once those go into effect, hopefully situations like this will be mitigated.
There is a lot of opportunity for exploitation in the current laws because they are ridiculously complex.