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5 Star is reporting that California might be next to tax online shoppers via the Nexus Syndrome.
All eyes focus on Amazon again, I suppose, as we wait to see if they will challenge the proposed law, or rather wait to see how their New York effort goes.
Tags: affiliate marketing, new york state internet and pay for performance taxWe represent a serious representation for Amazon and other online merchants, and as such, Amazon et al are obliged to collect taxes on all purchases made by NYS residents, regardless if an affiliate was involved in the transaction. That’s what our friends in Albany, NY, are telling us.
Let’s set this up.
Yes, New York needs to collect taxes in some format in order to make up for internet purchases. At the same time, New York needs to do it in a way that will not rob from Peter to pay Paul. Especially since recent evidence suggests that Peter isn’t going to have any money left to rob.
Here’s the set up:
Amazon says it is advertising when it compensates New York-based websites for posting links that refer customers to Amazon.com. New York says it’s soliciting business. The distinction means all the difference in the world for sales taxes, for Amazon, and possibly even print media, television and radio.
Amazon.com sued New York State earlier this month, challenging a newly enacted law that has serious implications for online advertisements. In April, the New York legislature passed a law designed to increase sales tax revenue from Internet sales. The law is known as the “Amazon tax” because of the way it broadens the sales tax law to apply to Amazon’s Associates Program, thereby achieving the necessary legal nexus for New York to force Amazon (and other Internet retailers) to collect and remit taxes on all sales to NY residents.
You can read the full article here: New York’s Ambitious Sales Tax law
So that’s the current state of affairs.
Let’s examine in detail what Braden Cox did an excellent job of explaining in the article, from an affiliate standpoint.
While I might think pretty highly of myself, it’s unlikely that I, or the other New York based affiliates are what are exclusively allowing Amazon to do commerce here. They are simply too big, and in fact, a household name. That would seem to put this issue well outside of the Quill decision. For Amazon.
But is that true only in certain cases?
What about smaller programs, such as those for merchants you might not have ever heard of unless they had an affiliate program? An argument could be made that New Yorkers could find them and purchase from them through PPC initiatives directly presented by the merchant, or social networks, or natural SERPs. At the same time, it’s also safe to say that affiliate sales will make up a larger percentage of their sales. Potentially, given the right affiliates are involved. (In many cases, this still isn’t true, as power affiliates don’t often get involved with very small merchants for a myriad of reasons.)
That’s where I question the magical $10,000 that New York has deemed as the indicator of Nexus. Given the criteria that the TechLiberation article points out for determining when Nexus occurs, it would seem that a flat figure is an unfair way of determining what merchants have a Nexus here, and which don’t.
However, if you start to look at what might be a good indicator of Nexus, i.e. what percentage of your annual revenues come from affiliates, it starts to get even scarier. There’s enough merchants that manipulate these totals already for other purposes; we don’t need to add fuel to the fire.
I’ll be writing about this much more, as it so directly impacts me. In the meantime, here’s some other folks that have touched on it today:
Shawn Collins, Overstock Drops NY Affiliates
Tags: affiliate marketing, new york state internet and pay for performance taxJust received word that Overstock.com is dropping all New York affiliates. my opinion on that in a few minutes…
Tags: affiliate marketing, new york state internet and pay for performance tax
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