72 Kilowatts Internet Marketing

More on the New York Tax Initiative

I’ve been pondering solutions to this New York Tax law for the better part of a month, and I’m not finding a clear way out of it, short of Amazon winning it’s lawsuit.

What can happen:

New York wins, other states follow suit, and affiliate marketing suffers a serious blow. Since affiliates are the crux of the whole Tax nexus (initially), it’s likely that quite a few affiliate programs will fold.

Some will hold on though, based on how specifically the judgment in the case is written. Large retailers may not be affected at all, if it’s decided that affiliates aren’t the only means they have for attracting New York business.

Secondly, the law can then be expanded to affect advertising agencies, PPC engines, other forms of banner advertising on websites, etc. Seemingly, any third party that may influence a New York buyers decision to purchase may at some point be considered a Nexus. It’s a slippery slope.

What Can’t Happen:

Unfortunately, the problem cannot be solved by applying sales taxes on all internet purchases made by New Yorkers on out of state websites. That has already been deemed unconstitutional. No taxation without representation, right? It’s one of our founding principles.

What NEEDS to Happen

Amazon needs to clearly demonstrate that New York affiliates:

1.) Do not represent a significant portion of their marketing efforts to New Yorkers.

2.) Are not targetting New York customers, as a rule, to begin with.

Personally, I believe Amazon will be successful. I just hope it’s soon, before this ball starts rolling across the country, and affiliate programs start to close as a result.