There is a lot of upset over the new internet sales tax laws that apply directly to online sales, and are already hitting some affiliates hard.
These laws require online merchants to collect state sales tax if they have local affiliates in those states. The states currently affected include California, Hawaii, North Carolina and Rhode Island - but many other states are in the process of following suit...
Merchants have always been responsible for sales & use tax on sales made within their own state whether that be online, offline, or mail order sales. The new laws propose that online merchants should also pay state sales tax in certain states where they have affiliates. The argument being that their affiliates represent a "physical presence" in that state.
A handful of cash-strapped states have weighed laws that would use the presence of affiliate marketers to force e-commerce companies into collecting sales tax. source
The New York State legislature has included a provision in their $122 billion budget. About $50 million of this is meant to come from a tax on some online retailers. (source no longer available)
How will the new internet sales tax laws affect you, as an affiliate marketer or as an online merchant? Good question.
So far the damage appears to be fairly contained, directly affecting affiliate marketers in the 4 states mentioned and larger online retailers that ship physical products.
You have probably already heard the news of Amazon.com dropping affiliates in certain states, but here is a list of merchants that dropped affiliates in New York: Merchants that Dropped New York Affiliates (link no longer available).
Merchants are fighting back
Dropping their affiliates in the affected states is a direct message to that state regarding their disagreement with the new internet sales tax laws. Basically, they are refusing to pay the additional state sales tax by pulling their affiliate program in those states.
"It's painful to have to terminate these relationships with affiliates, simply because they live in states where counterproductive (and likely unconstitutional) laws are being passed," said Patrick Byrne, Chairman and Chief Executive Officer of Overstock.com. source
The states that are looking at passing this provision to their sales tax law obviously want to increase their tax revenue. Unfortunately, given the widespread response by major online merchants, the new laws will create hardship on their local citizens - ultimately damaging their local economy even further.
Imagine for a moment that you live in New York, and earn a healthy 6-figure income from your affiliate sites. You pay income tax, and contribute to your local community. You are one person. In steps this law, your primary merchants drop you as an affiliate, your income drops to below poverty level practically overnight. (Overstock.com dropped 3,400 New York Affiliates)
Amazon.com and Overstock.com, two of the internets largest retailers, have both filed lawsuits against the state of New York. Overstock dropped the NY affiliates, while Amazon decided to pay the sales tax on sales made by NY affiliates pending the outcome of the lawsuit.
The outcome of those lawsuits, and each states response to their lack of participation in sales, will ultimately influence the future of online sales and affiliate marketing.
Personally, I applaud the merchants for taking a stand, and the affiliates who have written to their state representatives regarding the new internet sales tax laws. Affiliates in the affected states are currently taking the hardest hit, but this is something we should ALL be paying close attention to.
Will the Internet Sales Tax Laws affect you directly?
If you are an affiliate in California, Hawaii, North Carolina or Rhode Island then you have probably already experienced immediate termination by certain online merchants. What about the rest of us? You need to keep an eye on your state, because you may just be next.
The question has been raised by independent merchants, regarding their sales tax obligation in these states where they may have active affiliates. To date, the laws are obviously targeting the larger online retailers.
New York, for example, has a $10,000 threshold:
If an online retailer did not make at least $10,000 in gross sales to New York residents, they are not obligated to collect sales tax. (source no longer available)
It seems obvious that they are also targeting the sale of physical products. But don't get too relieved just yet if you only deal in ebooks and virtual products. New York also wants to impose a 4 percent sales tax on online downloads of music, ring tones, games, movies and other media from online retailers. source
Are smaller retailers and info-products next on the list? Obviously that depends on each state, the outcome of current lawsuits, and the response from buyers and sellers alike. As I said, this is definitely something we all want to keep an eye on.
In the meantime, I suggest "business as usual". Do not let this deter you from setting up affiliate sites or starting your own affiliate program. I live in Tennessee which is so far unaffected, so I plan to continue managing my affiliate sites and setting up new ones.
If you live in the affected states, and worked directly with merchants who are declining affiliates in those states, look for independent merchants to work with. Worst case scenario, you can sell profitable affiliate sites to someone in another state. Partner with someone in another state. Remove affiliate links and monetize with Adsense and advertisers temporarily until things (hopefully) resolve. Create your own info products, etc.
I'd love to hear your thoughts on these new Internet Sales Tax Laws that seem to be spreading through the states like wildfire. And affiliates from California, Hawaii, North Carolina and Rhode Island - We'd love to hear from you! What are you experiencing on your end, and what is your recovery plan?
Best,
Resources Related to Internet Sales Tax Law:
- Internet Taxes, Wikipedia
- Overstock.com Drops Internet Affiliate Advertisers in California, Hawaii, North Carolina and Rhode Island.
- Amazon Cuts Ties to Affiliates in Hawaii
- The ‘Amazon Tax’ and the ‘iTunes Tax,’ Compared
- Dear Legislators – The Amazon Tax Won’t Raise Tax Revenue
- NY’s “Amazon Tax” Takes First Casualty: Overstock Affiliates
- Amazon Affiliate Tax Solution
About Lynn Terry
I'm glad I don't live in California, Hawaii, North Carolina, or Rhode Island. Any bets on which state is going to try this next? My money is on the People's Republic of Massachusetts.
Only one solution, and that is to FIRE the idiot politicians that came up with this hair-brained idea.
I did see Massachusetts on the list of more aggressive states when it comes to taxes. New Jersey too I believe. If Amazon and Overstock fail at their objectives in NY, I expect we'll see most states follow suit.
Lynn,
This is definitely the beginning of something much bigger. As each state begins to exert its influence over the online merchants, we will see a mass exodus of companies leaving the country. Florida is still a good place, because they only have sales tax, instead of state income tax.
We should use this as an opportunity to talk about the Fair Tax http://fairtax.org - a sales tax that would replace the income tax. The current administration would never go for this, but the country is in the process of rising up against this recent overspending spree. Every time the government brings up a new initiative, it tacks on a trillion dollars, and the only way we could ever conceivably pay for all of this is through increased taxes.
The Fair Tax would actually reduce the burden of most employers in having to deal with income tax, and they would only have to worry about paying the fair tax on things that they purchased.
Thanks for this article.
Micheal Savoie
California just defeated as did the gov of Hawaii. Overstock was just notified and has said they will continue doing business with affiliates in California and Hawaii. Other states, including Maryland, Minnesota, and Tennessee, considered nearly identical schemes, but rejected these proposals largely because of the adverse impact on their states’ residents. I don't know if you have incorporated in other states how that would impact you. Hope to get an answer within the next 24 hours.
Mike
I read that earlier today, just after I published this post - glad to hear Hawaii affiliates are back in!
I was curious about that as well, incorporating in another state. I look forward to hearing what you find. That seems like "tax evasion" to me, or that (under their definitions) you would still have a physical presence IN that state. Like I said, will be interested to know for sure.
What bothers me most about these laws is that they specifically target certain merchants. It seems very unfair, or unethical I should say. They are an easy target vs the independent online merchant that sells $50k/month in ebooks or info-products.
Easy Pickins as we say here in Tennessee...
I was wondering when you were going to weigh in on this. I am in Utah where I don't see a huge risk of this happpening but there is always the possiblity. I believe these states doing this have really not thought this through! You are exactly right, this will worsen the economy in local markets. These states are not affecting the large merchants. They are affecting and essentially punishing the citzens of their own state! I think this is ridiculous!!
I'm sure they did not anticipate the pull-out response from the merchants targeted. Those merchants will not lose sales from those states, only sales previously referred by affiliates in those states. I'm guessing this still represents a significant revenue loss, and I'm also guessing that this is a temporary solution - pending the lawsuit(s) in New York.
I'm curious how affiliates feel across the board. Specifically affiliates in the states directly affected to date. Are affiliates pleased that the merchants they represent are making a stand on this issue. Or are affiliates disgruntled for being dropped with hardly any notice or opportunity to recover (or replace that affiliate income)?
Lynn...
Thanks for picking up the gauntlet on this issue. You are a quick lady. I live in Michigan, a state just scratching by as most are aware.
I believe profitably monetizing sites in the future will require a hybridization of those methods left to us with an emphasis on physical goods and info products. I look forward to sharing some of what I find in the future, especially how to do this cost effectively.
Lynn,
Tennessee hasn't passed any legislation yet, but there are bills pending in the house and senate:
http://wapp.capitol.tn.gov/apps/BillInfo/Default.aspx?BillNumber=SB1741
The legislative session is over for this year. But you should look out in January. I expect these are in study committees right now, so they will have some direction on where they are going with them for next year.
Also, a correction to your post. You say that the new laws require merchants to pay sales tax. Technically, the merchants "collect" sales tax and the residents "pay" the sales tax.
In states like Tennessee, residents are required to pay use tax as an alternative to sales tax on items they purchase from merchants outside the state and then bring back into the state. (I know everyone sends in their use tax bills at the end of the year for Amazon purchases, right?)
What these states are trying to do is force merchants to do the state's work for them and collect a sales tax on the purchase made by in-state residents. The merchants then turn over the collected tax to the department of revenue for those transactions.
It will be interesting to see what Tennessee and other legislative bodies do during the next legislative session.
Thank you for the correction, Eric - and the link. I am in the process of pulling together some details for my local reps. I feel that they need to be properly informed on some of the finer details, and I have questions on how they intend to enforce these laws... ethically.
Yes CA and Hawaii are safe, I covered both Governor's press releases on the 5 Star blog. We are SO lucky they "get" the impact of the law and what it would do to our industry!
Incorporating out of state is not a good option. Back when the NY tax issue hit this was discussed a lot and I think a lawyer even went into why it would not work. The law is based on the state where you physically reside. Talk to a lawyer 1st if you decide to try it to be sure you don't get in trouble.
I'm not quite sure what the ultimate impact would be, or what it would "do to our industry". My imagination goes wild with the paperwork nightmare they are imposing. Specifically with smaller online business owners (like myself, and other independent Affiliate/Internet Marketers) in regards to keeping records of the location on all sales and all affiliates and collecting/reporting multiple sales tax rates for select states.
All that aside, my first business was an offline brick & mortar shop in the city. I collected sales tax on products and services, and reported that collected tax to the state. It was required paperwork.
Should an online business be any different? No. The only question is what constitutes a "physical presence" in regards to the requirement to collect and report sales tax to various states.
What about digital products? Should they be treated differently than physical products? And what about the difference between an ebook, and a print version of that same ebook?
I'm curious if all of the Internet Marketers that got into selling physical versions of their products are collecting and reporting sales tax on every product sold within their own state?
Texas seems to be safe for now. Absent anything coming up in the special session of the legislature, they won't be in session again for 2 years. Maybe some of my North Carolina friends can "move" to Texas :-).
Thanks for getting the word out, Lynn. As a NC resident I am very discouraged. I have spoken to many of our NC Reps regarding this and some of their finance lawyers and they do not seem to "get" it at all - simply looking at what they think is a way to accumulate more taxes for the state.
If anyone from NC is reading this please use this link to see a suggested letter and procedure - legislature is back in session next week. It is critical that we make calls, put the pressure on.
http://www.performancemarketingalliance.com/2009/07/02/north-carolina-affiliate-fight-still-waging/
Nan
To be honest Lynn, I'm really not sure how I feel about this yet. So this will likely come out a bit rambling, and maybe will wind up with a point 🙂
I've always wondered when and why people's online purchases were ever exempt from sales taxes, except that it would be a major accounting nightmare for companies to collect randomly different amounts for all the combinations of local, county, state tax rates.
Now that we've gotten used to it, it feels like we're having the privilege yanked away from us.
That being said, to say that affiliates represent a physical presence of a company is certainly a major stretch. That could also potentially lead to an employee relationship being imagined to turn payroll taxes to come next.
I'm about as blue and green as they come politically, and I have no inherent objection to having taxes when they're used appropriately (remember, I was a public school teacher for 10 years and that paid my salary). But this looks like it will not raise a lot less money than people think because of the natural reaction of the merchants.
Plus whatever gains they do have are being partially negated by the loss of income we can spend on local commerce, as well as the loss of income tax by those same affiliates who are being cut off.
Let's play math for a second.
$20,000 affiliate commissions from Amazon means $200,000 in sales (based on 10% commissions).
Sales tax in NC is usually 6.75%. So that would mean the state would get $13,5000 in taxes.
If I earn $20,000 in commissions, and pay a 7% income tax, then the state loses $1400 in my income; plus if I don't have $20,000 to spend in NC then I'm not spending $1350 in sales tax. And if I don't have $20,000 to spend in NC, then other companies aren't earning their $20,000 to also pay their 7% income, which is another $1400. And if companies can't earn $20,000, from me, they'll have to cut employees who would be earning say $10,000 for that company. Thus, another $675 in lost income tax there; and the payroll tax that the company would pay on top of that. And the $10,000 that employee earns can't be spent on local goods so that another company can pay 7% on that....
(I sense a calculus problem coming up... as the limit of x approaches... 🙂
That will add up to just a bit over $5000 that the state won't get in order to receive the $13,5000 in sales tax. Convoluted, eh?
Bottom line is it won't make as much money as they say, and will aggravate a lot of folks.
Not to mention perhaps people moving away from a state so they also won't pay income taxes on the REST of their income, too; nor property taxes on the house they own. (And since affiliate marketers all live in HUGE mansions, that's substantial 🙂
Regardless of all that, I think it makes sense just to do an across the board sales tax based on the buyers location, not selectively based on who's driving the traffic. This probably should have been done in the first place in the 90s, and then we wouldn't feel the pain of this in the same kind of way. It's so easy to use an IP address to determine tax rates (although I'm sure "off shore proxies" could game the system there, too).
This will obviously not make me very popular; and I'm fully aware of the regressive nature of sales taxes. But it would be better to spread this cost minimally across the buyers online, instead of penalizing affiliates in a massive way. And the accounting measures would be easier for small and mid-size companies to manage this way instead of having variable records based on affiliates (if they don't sever their relationships altogether).
So, that's my labyrinthian addition to the discussion Lynn.
Bob
http://FollowBob.com
Oh, and I think some of this cutting off of affiliates in NC is premature - the law hasn't even been made official yet.
Bob
Right, but IF passed, the "effective date" is prior to the actual date passed or rejected. From what I understand, by 2 weeks - and the merchants refuse to be responsible for collecting/reporting state sales tax for that state in the case that it is passed. If the effective date were on or after the date the bill passed, the merchants wouldn't have to pull their affiliate/referral program out of those states prematurely...
The state of Washington will begin requiring taxing of digital products as of July 26, http://dor.wa.gov/Content/GetAFormOrPublication/PublicationBySubject/TaxTopics/DigitalProductsQA.aspx
So far they've exempted personal email (how generous of them).
Thanks for the link, Michelle.
This brought me back to studying the ITFA (Internet Tax Freedom Act) and specifically the amendment in 2007. The terms are very loose, so I'm having a hard time figuring out if this is deemed a "discriminatory" tax according to the ITFA. Here are a couple of links I am looking at:
http://money.howstuffworks.com/personal-finance/personal-income-taxes/internet-tax-freedom-act1.htm
http://www.cbpp.org/cms/?fa=view&id=80
I'm unclear at this point, but it seems an obvious conclusion that as of July 26th all info publishers, or people who sell virtual products online, will need to begin collecting sales tax on those products if sold to residents of Washington State - a) if they are located in Washington themselves, or b) if they have affiliates in Washington.
thanks for your comments Bob - I certainly am not politically or even economically savy - but as per the affiliate tax for NC - I do not understand taxing the merchant (i.e. Amazon). Yes, I agree it was a matter of time before a sales tax was levied for internet sales - but, as the business in NC I collect and report and pay sales tax on what I sell - but the disconnect for me is considering that I am a presence for Amazon in NC - and comparing that to brick and mortar. Wouldn't that be like having a brick and mortar store and when I sell something from it - the manufacturer (i.e. Amazon) has to pay the tax on that to the state of NC(as well as my store paying sales tax). As you said the bookkepping for these companies will be a nightmare - and I believe it is more than a threat when they say they will take their affiliate business offshore.
Great points, Bob. The internet was never meant to be a "tax free zone" and in fact merchants are (and always have been) responsible for collecting state sales tax on purchases made and products delivered within their state.
For example, when I order Dell products online, I pay Tennessee Sales Tax on my purchase - as there is a Dell facility IN my state.
The problem with the "Amazon Tax" (nickname) is that the new law determines that having affiliates in said state is considered a "physical presence" - therefore Amazon (or ANY merchant) is required to collect and send state sales tax for any purchases made from that state (even if they dont have an office or true physical location there). THAT is the main argument with these particular bills.
Here's how that would affect you, Bob...
You are based in North Carolina. If you sell products to buyers in NC, you are required to collect sales tax and report that tax to the state. But only on products sold/shipped within NC. Under the new laws, you will be required to collect state sales tax on any purchases made in states that pass the "Amazon Tax" bill - if you have affiliates in that state.
So you'll need to track the location of all affiliates, the location of all buyers, and the amount of sales tax for each state that requires it, and report each to each state.
Of course, in the case of the state of New York, you are only obligated if you sell $10k+ in product to buyers in that state.
Up to this point, this has only applied to physical products. The law states that if you BUY products online, and you are not charged sales tax, that you are required to report that purchase and pay the appropriate state sales tax on your purchase. Most people simply dont know this, and dont report it - which is why the states are going after the merchants to do their paperwork for them (since the consumers obviously arent going to). This is what Amazon is fighting.
Are info-products exempt? It has been unclear, and many claim exemption under the ITFA (Internet Tax Freedom Act). That said, as Michelle pointed out above the state of Washington is now taxing digital downloads as of July 26, 2009 (see Michelle's link above) and the state of New York is proposing a bill now nicknamed the "iTunes Tax" on digital goods.
They are obviously targeting the larger online merchants - Amazon.com, Overstock.com, iTunes, Rhapsody, etc - but how long until this filters down to people like Bob the Teacher and John Reese?
If/When it does, it will certainly create a bookkeeping nightmare in comparison to the way info-publishers currently do business online. To be honest, at this point I have no record of most of my buyers' locations for things like reports, ebooks or memberships - or for the physical location of my affiliates. (Do you?)
Do you feel you should be responsible for collecting multiple sales tax rates on sales made to buyers outside your state? Do you feel that an affiliate of yours represents a "physical presence" of your business in their state?
The real question is how they intend to enforce this... fairly. If the intent is to target the higher end merchants for the purpose of easy state tax revenue, no problem. But I personally feel that if enforced, it should be enforced across the board. Meaning ANY online merchant that meets the requirements ($10k in gross sales to the state of New York, for example) should be held to the same standards as Amazon, iTunes, etc.
Agree or disagree?
Just to clarify, I'm not against paying my taxes. I drive the speed limit, wear my seatbelt, report every dime of my income, etc. I'm simply reporting the facts here, and suggest we ALL keep a close eye on this - because it has the potential to have a HUGE impact on the way we do business online.
It is pointless (in my opinion) to fight these bills simply because you don't want to pay additional taxes. What we should be concerned with is whether it is legal, and making sure our representatives are informed. And of course, being fully prepared to embrace the change ourselves as online merchants.
Accounting wise, I can set up different sales taxes by state depending on the buyers location from within my Paypal account. So that level of accounting would be relatively easy. Keeping track of where all the affiliates are (especially if they move), and whether a purchase from a taxing state was made through a local affiliate, or a distant one while there are local ones is another issue.
For example, if I'm Lynn's affiliate, I'm a physical presence in NC. So does that mean that ANY purchase from NC buyers - even those from traffic sent from non-NC affiliates - would be taxed?
I think however it plays out, it's time to become an active affiliate for Quicken and Intuit Software (at least until they decide to cancel their affiliate program) and buddy up with an accountant now before they have to raise their rates to keep track of all this 🙂
Bob
Under the proposed law, yes - the merchant is responsible for collecting sales tax on ALL sales made within the state if they have a "physical presence" in that state. So having one affiliate in NC would obligate me to abide by that law, regardless if that affiliate ever made a single sale.
Of course, in the case of the state of New York, for example - you would have to meet the requirement of $10,000 in annual sales to residents of New York to be obligated to collect New York state sales tax on those sales.
Question: Nevermind the fact that they havent yet determined if it's LEGAL. Considering the time and additional professional fees incurred (including set up of new bookkeeping practice, hiring an accountant/bookkeeper, mailing reports & payments, etc), do you feel that is fair considering you do not in fact have a physical presence in those states?
The red flag was raised in North Carolina several weeks ago by affiliates in that state without any success. I have to assume that the powers that be in that state believe there isn't enough opposition to threaten their standing or re-election efforts. Unless there is a ground swell of opposition in the few states who have enacted or are about to enact these laws, I suspect other states will follow suit. And maybe Amazon believes that the only way to get people squawking is to put some hurt on them.
I think the approach needs a legitimate foundation. Something other than "we dont want to pay more taxes" or "we dont want to lose our Amazon commissions". Points need to be raised about specific legal issues, and fair/ethical enforcement. I'm making notes now on points I want to bring up with my local reps, specifically to make sure they understand the nature of the business as a whole and also to get details on how they intend to enforce specific laws - ethically.
As usual, the hardship will be on the entrepreneurs and the successful.
Yes, Bob in my opinion. In your example, all purchases would have to be taxed because the mere fact that you have even one affiliate in the state deems you as having a physical presence in the state whether that affiliate makes any sales or not. In Lynn's Dell example, Dell collects tax from Tennessee residents not because they purchased from the Tennessee location, but because they have a plant in Tennessee.
that's where I don't understand the reasoning - Lynn your physical presence is in TN regardless of where your affiliates are - and you pay sales tax on what you sell to those affiliates. As one of your affiliates in NC I pay sales tax to NC on what I sell because that is where I have a physical presence - I don't understand Lynn collecting and paying all over the country because she has affiliates in various places.
New laws/requirements on state sales tax have the potential to completely change the game of online business. If this takes on and takes hold, it might be fair to say that only the serious entrepreneurs would survive.
Will this last decade go down in history as the "virtual goldrush of the internet", where no man was excluded from making their fortune online during the free years?
It's hard to say just how big an impact this could potentially have - both on those of us running a successful online business (whether products are digital or physical), and people who are new to the scene and hoping to start a successful online business in the next few years.
One of the perks to starting an online business - vs a traditional business - is the easy start-up and low maintenance. The bar for entry has been very low to date.
Is that fair? Shouldn't online business owners be treated the same as offline business owners - in regards to taxes and requirements? Sure, why not. The only real issue up for debate in this discussion is HOW, and that the requirements (and mode of enforcement) are both legal and ethical.
THAT is where we need to be educated, stay informed, and be proactive...
California will do anything and everything to get their hands on every nickel. The State is broke and writing iou's to their vendors starting last week. They have just raised our State income tax, the gasoline tax, state sales tax, tobacco tax and vehicle registration tax in the last 3 months. This tax is no surprise. The tax increases are causing a mass exodus from the state and consequently lowered tax revenue. They just don't get it. The internet is like striking oil to them, but they forget that some of these wells are going to pack up and leave.
I the in CA the Gov vetoed the tax so it will not happen in CA
Kudos to you for standing up and letting us know about this very unfair law- I'm tweeting about it now.
All the best,
Eren
As someone from NC who has not only been dumped by Amazon, but who has also had money deducted from my paycheck two months in a row on my "real job." As a state employee, I'm one of the privileged people who get to help pay for the state's irresponsible spending. On my paystub, this was labeled as a salary reduction (What's that again, I work under yearly salary contracts so isn't it illegal to break contracts without going to court or proving that I haven't lived up to my end of it???) So, in MHO, our illustrious NC leaders are overstepping their actual constitutional powers. But hey, that seems to be the way things are going in congress as well. Not only are companies threatening to pull out of states, but several large corporations are threatening to move offshore if congress moves forward with some of their goofy ideas.
After that little rant, my real question is this: Other than working really hard to get the current scoundrels voted out of office, what is our best course of action? Should we just rely on adsense? If we sell our own products, I'm guessing we shouldn't have affiliate programs of our own because we would end up in the same quagmire. Has anyone cobbled together some sort of action plan for the future?
Rasby
Considering you are in NC, and that you have been dropped from Amazon.com, I would recommend that you look to replace those links and that income immediately as your first course of action. Seek out independent affiliate programs, and temporarily use Adsense if you need to buy some time.
Other options include creating your own products in that niche, selling your affiliate site, or partnering with someone out of state.
Personally, I will not let any of this deter me from continuing to do business online and plan to change and adjust as necessary. Obviously we want to stay informed and be proactive on political issues, but we also need to be proactive on business issues.
As for info products and affiliate programs, I plan to continue business as usual in that department as well - complying with any laws that go into effect along the way. If it comes down to collecting various instances of state sales tax, the profit potential in the info product business definitely supports the burden.
Rasby - I feel your pain. I am finally beginning to "get" affiliate marketing somewhat and this feels like the rug is being pulled out from under me.
In my opinion the first thing to do is go to this link:
http://www.performancemarketingalliance.com/2009/07/02/north-carolina-affiliate-fight-still-waging/
and follow their recommendations. This group - performancemarketingalliance is an advocate group working with the states and the state's legislatures.
This is a recommendation for all affiliate marketer's in all states - it is a place to start - and grumbling just is not enough. If you are in another state go to:http://www.performancemarketingalliance.com
it will have an update of action in all the states and recommendations.
It is sooooo important to contact our state House and Senate Reps - you can call their offices often speak to them or an assistant that will take notes and give it to them. To find names and contact info go to:for NC - http://www.ncleg.net
For other states I went to google and put in TN or NC or SC state legislators. This is very important and needs to happen ASAP.
You need to have intelligent points to make and tell how this effects you personally - again Performance Alliance Marketing has suggestions on that.
Nan
Good afternoon, Lynn.
I live in NC and this is having an effect on my business, obviously.
For over six years, I earned 100% of my income from affiliate marketing. I've been an Amazon.com associate for about 13 years.
At one point, Amazon was a significant source of revenue, but it has declined over the years. Still, I have links to Amazon.com on thousands of pages and it will take a long time to find and remove all of them. In the meantime, I'm sending customers to Amazon.com at my expense with no income from it.
I know a lot of others in NC don't share my opinion, but, at this point, I'm more displeased with Amazon.com than I am with our state legislators.
Yes, I know that there are vagaries in when the law may go into effect and when companies will be required to collect sales tax.
Still, Amazon.com canceled my 13-year affiliation with no change in the state law, and with precious little warning.
If they had reacted after the law went into effect, I probably would not be mad at them. However, by canceling my affiliation in anticipation of a change in the law, I feel like they are strong-arming me to put pressure on my representatives.
So, I really don't care what finally happens with the NC laws. It's going to have a serious effect on my business if it's passed, but that's life in the 21st century.
If the law is not passed or if the Governor vetoes it (both not likely), and if by some miracle Amazon.com wants to reinstate my association, I'll have none of it.
I'll never recommend Amazon.com to anyone nor purchase from them ever again. I'm done with them.
I don't expect others to agree with me and I'm not trying to change anyone else's opinion of Amazon.com. I'm just telling you how I feel about it.
Fortunately, I've been working to change my business model, for the last several months, to rely less on affiliate marketing and more on real-life consulting, so it may turn out that I'll earn more and work less as a result. We'll see.
If I were still relying 100% on affiliate marketing for my income, I'd be in a world of hurt right now.
I'll leave it to others to debate the legalities and other related issues.
Good luck to all the other affiliate marketers out there.
JD
Hi JD,
Thanks for weighing in. I was hoping to hear from affiliates who were directly affected by Amazon and other merchant's decisions in this matter.
Not being in NC, or in your position of losing affiliate relationships with specific merchants, I can only empathize. I know all too well what a scramble it can be to recover. Long before this issue I've worked with merchants who have either dropped or moved their programs with little warning - leaving me to scramble to locate & update affiliate links, research alternate merchants, etc. It's always been a part of the business.
It seems there are two takes on Amazon's action - one being yours, the other being affiliates who are grateful that Amazon is speaking up on their behalf. By dropping affiliates in those states, they are making a very loud statement that ultimately affects us all.
I am guessing that this is likely temporary, and that the merchant's will reinstate affiliates that have been dropped. It's an if/when at this point, but that would certainly be my guess.
You're smart to diversify. That has always been the advice when it comes to online marketing. We never know what's coming down the pike, whether it be market changes, merchant updates or Google slaps.
This particular issue is much larger than you or I, or even Amazon, and stands to affect our industry as a whole. Personally I am pleased to see the larger online retailers taking a stand, and to see affiliates contacting and informing their local reps. To be honest, it's high time the laws and requirements get clarified, in very clear terms, in regards to ecommerce. It's here to stay.
Good morning, Lynn.
As you said, this stands to affect the entire affiliate marketing industry.
I don't think it will be cleared up until the Supreme Court renders a decision or until the US congress passes a law that will be equally enforced nationwide. After all, this is interstate commerce we're talking about and if every state decides how they want to handle it, it's going to become a real mess.
At least, that's my opinion, for whatever it's worth.
Good point, John - time to start educating our national reps in the House and Senate as well as our state representatives.
Nan
Much of the push for this kind of legislation is coming from brick-and-mortar businesses and trade associations. They're putting the pressure on state-level politicians to "level the playing field". I wish I could find where I saw it, but a large trade association went on the record as enthusiastically approving of NC's recent actions (I think it was a book seller's association, but not certain).
I don't think 'educating our national reps in the House and Senate' will do one ounce of good. They know. They ALL know. But they have the power to take one person's money and give it to another, and that's heady stuff.
And most people will just sit back and watch and let it happen - then wonder where their rights - and their money - went.
That's interesting, Steve - they are obviously misinformed because as I said early the internet has never been a "tax free zone". Merchants who sell physical products online are required to collect state sales tax on all in-state sales - just like offline merchants. Those offline merchants have not been required to collect sales tax on shipments to customers in other states. So the finger should be pointed back at them to begin doing the same if they support it so enthusiastically.
I could see how this is really going to impact making money on the internet, but I can also see how this is going to positively impact someone who can take advantage of helping other people who live in the taxable states. I am thinking if you lived in Nevada for instance, that you would be able to set up a business where people would go through to by-pass the clearly screwed up taxation issues that our government is trying to institute. Letters and phone calls to your Senator's and Congress people will definitely help, but I think we can really set a precedence with our lawmakers when the next election comes around. We don't need more taxes, we need less with more accountability of the people in office to do what we elected them to do for us... Obviously, I am very passionate about this issue, and for the record.. I don't mind paying taxes because we need some to support our infrastructure, but this is getting ridiculous!
Personally...I think the U.S. is done for. It is no longer the country I once knew and loved and the country it was founded to be. As such I am making plans to leave the U.S. and go live in another country where there is more true freedom left. I hate to say it but is virtually hopeless to try and influence politicians in a significant and meaningful way. They are going to do what they do in the end and there is little that any of us can do about it. The majority of Americans don't get riled up until you start taking away their TV's and other things that matter to them.
The majority of Americans don't even know what internet affiliates are much less care about the hardships they may end up facing to pay new sales taxes.
That's just the way it is.
Carlos
Actually, the affiliates aren't targeted to collect, report or pay any new sales taxes. Only the merchants, and the buyers in the affected states.
The affiliates are affected when the merchant decides to cut ties with affiliates in those states, saving the merchant and the buyer from any hassle with the new sales tax law.
Hi Lynn!
Nice HOT topic for the HOT summer - huh? heh heh
As you already know, I mentioned on my blog last week that I was terminated from several different affiliate programs, including Amazon, Overstock and NetShops.
Knew it was coming as RI eventually passed their version of the "nexus tax" also fondly know as the "Amazon Tax" (that was built into the budget bill). The governor ended up signing the budget bill as is since he doesn't have "line veto" abilities in RI to remove aspects of the budget bill.. Plus the fact that it was veto-proof bill. They would have just overrode the veto quickly. The problem with being such a small state! 😛
But interesting enough, as YOU also noted, all my terminations so far have been from merchants dealing with physical products. And some of them are big, well-known merchants like above mentioned Amazon.
I just waited til the end of holiday weekend to start figuring out my options. Wanted to ENJOY my weekend first and worry later! 😉
Had a talk with my attorney over the phone this morning and will be talking with my accountant here in RI Wednesday to "hash it out".
I'm leaning towards forming a LLC (Limited Liability Corporation) in a nearby "no sales tax" state. I just don't want to physically move and I had been thinking of finally doing the LLC the over the years. Wouldn't have done the LLC in RI anyway. heh heh
I believe there are 5 states that don't have a "sales tax" - Alaska, Oregon, Montana, Delaware and New Hampshire.
New Hampshire less than 100 miles away. 😉
But ... ANY affiliate thinking about doing the same sort of thing REALLY need to sit down with an attorney to discuss any options that could work for you. NOTHING is clear-cut these days!
We're never gonna know about the constutionality of these state's "interpretation" of the Fed's version of the Internet Tax from the 1990s UNTIL this gets to the U.S. Supreme Court and it clarifies the interpretation.
TOO many gray areas.
I know one of the RI reps as he owns a popular restaurant here in Newport, RI. I still don't think he gets (like most others) what being an affiliate is all about.
I told him the other day, that because the bill passed, I could stand to lose one third (or more) of my affiliate income the rest of the year and beyond because of the multiple affiate account terminations I have received already. And I asked him, "Since I'll have one third less income to tax, you guys are just gonna receive LESS ... NOT MORE income tax revenue from me at the end of the year. AND those same merchants (that I used to be an affiliate for) will STILL be able to sell to RI consumers and not pay ANY sales tax anyway."
His reply? "WHY would they want to terminate you if you're making them money?" (thinking to myself, "Somebody, PLEASE put me outta my misery! AND him too!")
BUT explaining Internet Marketing to a politician is like trying to explain it to your family and friends.
And we ALL know how challenging that can be at times! LOL
I plan to keep right on doing what I'm doing and try to adapt as best as I can.
Remember though ... Politicians AREN'T the ONLY ones that can do "work-arounds"! 😉
Rick Wilson aka CorpRebel 8)
P.S. EVERY affiliate still needs to keep up the pressure on their state reps whether they have actually been affected or not!
I agree - there are too many gray areas, and as I pointed out earlier the Internet Tax Freedom Act is very unclear on many points. Specifically when it comes to applying a sales tax on digital downloads - currently targeting music like iTunes, but certainly not ruling out ebooks and membership sites.
It's hard to explain the finer details to someone who doesn't eat, sleep and breathe this stuff... But the merchants are only going to lose a tiny fraction of their sales from those states. I wish I could remember which link I read it on, and what the percentage was, but it was something like a 1% loss or less.
Most people that get online to search a product are going to find it regardless - if not through your site then through the merchant or another affiliate site in those top 10 results.
One other thing ...
IF the states end up being allowed to do this then why can't "local" city and county governments do the same?
Think of the pure havoc THAT would cause since many cities have their own additional sales tax.
Even MORE of an accounting NIGHTMARE.
Rick Wilson aka CorpRebel 8)
*shudder* 😯
Wow, that was an interesting thought, Rick.
Just like in your example of the RI Rep you talked with - for the most part our local Reps and Governors do NOT "get" this. They have to be educated - and that means calls and emails and letters - yes, what a drag, and most often it does not seem to be working. But this is a part of our system - and I have seen it work - and without educating them it definitely will NOT work. It is a bit of a hassle to do it - but easier than moving to another country - and don't you still have to pay tax to the US if you move to another country unless you renouce your citizenship?
"and don’t you still have to pay tax to the US if you move to another country unless you renouce your citizenship?"
I'm certainly NOT gonna leave the country! I doubt if I'd get that POd. heh heh
Yeah, you still have to pay the income tax on some portion of income earned IF you're still a U.S. citizen. Not sure what the criteria is for that, though.
BUT ... You wouldn't have to worry about this "Amazon Tax" issue as you wouldn't be living in ANY of the states! LOL
Rick Wilson aka CorpRebel 8)
I live in California (which is 24 BILLION in the hole) and I think this tax is only the beginning. I expect we'll soon have a federal sales tax too - the country is in real trouble.
I've been in sales for over 20 years, and like-it-or-not, if you're an affiliate in one of these states, you're a salesperson, and that tax should be collected and remain in the state to help the government provide the services we all expect (schools, fire, police, etc.)
The only good thing that might happen is that this might make IM less crowded. I only hope whatever happens, that it's clear and simple; not just another way to get fined, or stop the little-guy from competing.
Are we a salesperson? And are sales reps considered "physical presence" even if independent (ie filing as sole proprietor)? Off to do some research on that - thanks for bringing it up.
And on that note, this is a good time to read those affiliate contracts that we agree to (but never actually read) when signing up for an affiliate program. There may be something in there we can use to our advantage...
Except for a day or two in the national media, this topic is not getting much attention. I think it’s right to consider that the problem is deemed safe ground for state legislators. There is now something in the range of 45 states facing major fiscal short falls and you can believe that they will attempt to enforce and apply by any means possible ways to secure state tax funding. This one is an easy plumb to pick and other states besides those mentioned may soon follow pushed by brick and motor lobby groups who smell blood in the water.
There is a loose analogy here to Napster, where Amazon is but the tip of the iceberg.
I’d like to see more suggestions as to alternatives rather then taking a defensive stance. Battles are never won by a holding action. Especially in this case where affiliate programs may start to fall like dominos.
Taxes are definitely necessary to provide for the common good. The problem is that the State and Federal governments in the U.S. have chosen to not live within their means as given to them by the people. Instead they have chosen to foolishly overspend and then spend some more only to turn around and tax the people in ever increasing amounts to feed their non-stoppable spending.
Why is it that most times, whenever a government begins to run out of the money the first thing on their agenda is to find ways to increase our taxes? Do governments have a right to maintain their funding at desireable levels through increased taxes when the rest of us must tighten our belts during hard economic times?
Why can't governments also learn to live within their means?
Is there no one left in the State and Federal governments with enough guts to say no to higher spending and to make the tough and unpopular choices that are necessary to bring some fiscal restraint to the whole mess.
So what if they have to cut out desirable services! There isn't enough money. I say no more taxes! No more spending above one's means! Just like the rest of us, who have any semblance of fiscal responsibility and good sense must do.
Why do the American people allow the unbridled spending and ever increasing amounts of debt that the U.S. is falling headlong into, to continue? If we are not allowing it and if we are simply having to suffer the consequences of what politicians have decided to do...are we truly living in a democracy any longer?
Carlos
"So what if they have to cut out desirable services!"
That's not how politics works. If a politician is ever forced to reduce spending, he will *always* look for the most painful places to cut first, such as police, firefighter, and teacher budgets.
The only way to deal with that is to fire the morons, and elect somebody who will tend to business. However, this country has devolved from a constitutional republic into a quasi-democracy, so the only people who can get elected are those who promise the most booty from the public treasury. Franklin and Jefferson both warned us about this. This country has at most 2 more generations before we get a "president for life", along with the end of this once-great country.
"A Democracy cannot exist as a permanent form of government. It can only exist until the voters discover that they can vote themselves largesse from the public treasury. From that moment on, the majority always votes for the candidates promising the most benefits from the public treasury with the result that a Democracy always collapses over loose fiscal policy, always followed by a dictatorship."
-- Alexander Fraser Tytler, Lord Woodhouselee, Scottish-born British lawyer and writer.
Interesting quote from Alexander there. Thanks for sharing that.
Regarding what you said...
"That’s not how politics works. If a politician is ever forced to reduce spending, he will *always* look for the most painful places to cut first, such as police, firefighter, and teacher budgets."
I just don't understand that at all. I mean if I was a politician I would always look for the least painful things to cut first. Certainly not police, firefighters, and teachers if it could be helped.
There are so many other things that could be cut first...sigh.
I just hope I can realize my desire to go live deep down in South America somewhere working over the Internet away, way far away, from all the problems here before things get too bad. That way I can look on from a distance without being too overly affected by all the insane things happening in the U.S. these days. Sad to say but it feels like there is little more that I can do at this point but make plans to go elsewhere.
I really appreciate the things shared by Lynn on this blog. She seems more honest and more level headed about things than most of those I routinely follow. If you are reading this Lynn...thanks!
Carlos
Yup - I'm reading, and thank you 😀
Anyone else find the humor/irony in the fact that Affiliate Summit East takes place in New York next month?
NOPE ... THAT one passed me by somehow. LOL
IF this issue keeps playing out like it has been then these Affiliate Summits will be ancient history by next year. heh heh
Rick Wilson aka CorpRebel 8)
Aside from the fact that the venue was contracted a couple months before the law came into being last year, New York is a big hub for affiliate activity.
Countless big brands and mom & pops already had a nexus there and were collecting tax.
Also, this presents us with an opportunity to bring the issues in front of the media more, as we've got a couple sessions focused on the issue.
Excellent. I just won a pass to ASE and would love to sit in on those sessions. I'll check your site for the schedule to see where those sessions fall, as I may not be able to attend the entire event. Thanks!
This whole thing just feels completely crazy. It's like watching a bad movie, you know it sucks but you can't help yourself from watching the whole thing to see if it gets any better.
Last week on Fox Business News, the show Bulls and Bears interviewed Rhode Island General Treasurer Frank Caprio.
Thx for that, Lynn. I was trying to find that video cuz I missed it on TV when was first aired.
Here is the treasurer of RI saying this was a poorly thought out bill and he was even told that they (the legislators) didn't expect much revenue outta this.
Embarrassed to admit I'm from RI after that. Even the treasurer couldn't figure why the bill existed. Kudos to him for actually speaking out.
Sheesh ...
I was wondering if you'd seen that, Rick. It seems to me that they were focused on how it would affect local businesses - as in stores that sell their physical products through Amazon, etc. More so than online business owners or affiliate marketers in the state. I may have misunderstood that. The wording was "our local business owners and creative community can't sell their books on Amazon".
Also, she said "you're going after the affiliates" in regards to the tax, but the states are actually going after the merchants. Later in the video she 'clarifies' that the affiliates who have a link to Amazon on their website "are going to have to cough up the taxes".
Below the video it says "Amazon has cut ties with NC retailers over similar issue". Which makes it sound like local stores - not "affiliates".
The wording was hard to follow, and it seems obvious they dont quite "get it". Though I was impressed at their effort -lol.
Here is a very well-written example of a letter sent in by a Tennessee based affiliate:
---------- Forwarded message ----------
Subject: State Sales Tax Affiliate Nexus
Gentlemen,
I wanted to gauge your positions with regard to the proposed legislation introduced last session by Sen. Marrero and Rep. Shaw as SB 1741 and HB 1947, respectively.
These bills appear to be Tennessee's form of a trend of laws that are currently being introduced and passing throughout the nation. It appears that these bills are an attempt by the legislature to create a taxing nexus by virtue of affiliate relationships between online merchants and website developers, online publishers and bloggers. I understand that these bills did not receive a vote in the House or Senate this legislative session, and it appears that they both ended the session in committee.
I don't know how well versed you are with regard to affiliate relationships among online merchants and web publishers, so I would like to take a moment to briefly explain a little bit about how my business works.
I am an independent web developer and part of the income that I receive is through commissions that I make on products purchased at websites like Amazon.com and a broad range of other online merchants. One of the things that I do is write about electronic products. In reviews of these products, I will provide links to Amazon.com's product pages for the relevant merchandise. If a reader clicks through to those links on Amazon.com and then makes a purchase, Amazon provides me with a small commission on the sale (usually around 4%). My audience is worldwide, so the reader may come from California, Canada, the United Kingdom, or even Tennessee. As a result, my websites do not target a specific geographic region for their readership.
As you may be aware, online merchants such as Amazon.com do not collect sales tax from Tennessee residents when they make purchases from such merchants' websites. Based on the Fiscal Note, I understand that the Tennessee Department of Revenue has opined that SB 1741 / HB 1947, standing alone, would not be sufficient to create a taxing nexus such that online merchants like Amazon.com would be required to collect sales tax from Tennessee residents for purchases made through their websites. I would note, however, that the language of the bills implies that such a nexus would exist.
The question of whether the affiliate relationships create a taxing nexus is where this issue becomes very relevant to me, your constituent.
As I mentioned above, there has been a trend in such "affiliate nexus" statutes over the past several months. One crucial component of this trend is the reaction from the online merchants once such bills are made law. The online merchants (which the states hoped to use to collect sales tax) cancel their affiliate programs, thus ending the supposed "affiliate nexus." Hawaii, California, North Carolina, Rhode Island and New York (to name a few) have all passed such laws and, as a direct result, thousands of web publishers saw their primary source of income disappear literally overnight when the online merchants terminated their affiliate relationships. While the TN DOR suggests that this bill will not suffice for the creation of a taxing nexus, Amazon.com has terminated affiliate relationships at the mere threat of such bills becoming law. I have little doubt that Amazon and others would do the same if Tennessee's "affiliate nexus" law were passed - regardless of the DOR's opinion as set forth in a fiscal note.
In these cases, there are no real winners. The states gain no new tax revenue, and the resident affiliates lose their incomes. If anything, the states lose money because some of those states impose income tax as well and they wiped out the income of residents by trying to place a square peg in a round hole. Additionally, the residents have lost income that was obviously going back to their local communities in the forms of their day-to-day spending. The online merchants are the only ones who come out unscathed by severing their relationships with affiliates (who may do very little "in-state" marketing in the first place), they avoid any obligations imposed by such states to collect sales tax from in-state residents.
As I hope you see, bills like SB 1741 / HB 1947 are most harmful to residents of the states in which they are passed. By using people like me as a pawn in game where the legislature is trying to refine (or redefine) the constitutional boundaries of a taxing nexus, the only real people who truly suffer are those, like me, who stand to lose their source of income.
I would also like to note that Tennessee has a mechanism in place for collecting tax on merchandise purchased from online merchants - Tennessee's use tax. The use tax requires the reporting and collection of precisely what SB 1741 / HB 1947 seek. Any items purchased by Tennessee residents from online merchants must be reported to the department of revenue if such items are for use or consumption in Tennessee. I understand that enforcement appears challenging for the such purchases; however, the passage of an "affiliate" nexus law will do more harm than good. I am sure that an enforcement mechanism can be developed to make the use tax more viable for collection on such purchased merchandise.
While I understand that there are many legislators who may not fully appreciate the concept of affiliate marketers and web publishers, we are, at our core, entrepreneurs - Tennessee entrepreneurs. I have worked extremely hard to build a successful online business and shudder at the thought of what SB 1741 / HB 1947 (or a replacement thereof) might do to my business and my home. I am not the only Tennessee web publisher who is gravely concerned with this bill - there are many others like me.
Again, I would like to know where you stand from a voting position with regard to these bills. Additionally, I am more than happy to respond to any questions or concerns that you may have with regard to affiliate marketing in Tennessee.
I look forward to hearing from you soon.
"I just don’t understand that at all. I mean if I was a politician I would always look for the least painful things to cut first. Certainly not police, firefighters, and teachers if it could be helped."
It is obvious that you are not a politician.
does anyone know if this is going to have a nock on effect for uk affiliates promoting sites in the US.
Personally I am based in London UK so not really sure if I need to worry or not?
The current wave of laws are about the individual states in the U.S. trying to collect taxes, so it would be a matter of whether your government tries to do it.
Don't Amazon and other companies with a UK presence have to charge sales tax already?
There is a new blog post up by Jerry West, well known super affiliate. He is in North Carolina and has been hit hard - losing approx 40% of his income practically overnight. You'll find his post here:
http://blog.seorevolution.com/2009/07/08/affiliate-marketing-why-state-lawmakers-are-idiots/
Thanx for the link. Going to check it out. I've heard of Jerry before just not too familar with him and his stuff.
DAAAYAM ... 40% is huge hit to take. Clueless lawmakers will never realize that it is NOW 40% LESS tax revenue they are now gonna receive from him now this tax year. Brilliant! *rolls eyes*
Sad, but it's the "sign of the times" and we have to get ourselves prepared to adapt.
NEVER a dull moment with Internet Marketing - RIGHT?
Rick Wilosn aka CorpRebel 8)
You'll *love* Jerry West - definitely someone to follow. He is faculty at StomperNet which is where I originally met him, but also has his own business independent of SN. He is a SUPER affiliate comparable to the likes of sugarrae (Rae Hoffman) and Howie Schwartz. Good guy!
Hey everyone,
Just got off the phone with my attorney and there is a solution. I'm hoping to have a link to an article that he is writing in the next day or two that will explain the process of setting up a corporation or LLC in another state. This attorney is very well respected and an expert in this area.
On another note I just received an email from one of my merchants with a revised wording on their terms of agreement. It reads, "Affiliate shall not host any part of its website on any server or network located in the States of New York, Connecticut, Rhode Island or North Carolina. Further, Affiliate will not link with any party whose website or servers are located in the States of New York or Connecticut.
Any Inappropriate Activities, including but not limited to those described, shall be deemed a material breach of this Agreement and will result in termination from the Merchant affiliate program. Merchant also reserves the right to disallow commissions from any Inappropriate Activities." Just thought I would pass this on as you may need to look at your own merchant Terms & Agreements.
Regards,
Mike
*** "Just got off the phone with my attorney and there is a solution. I’m hoping to have a link to an article that he is writing in the next day or two that will explain the process of setting up a corporation or LLC in another state. This attorney is very well respected and an expert in this area." ***
It's not a difficult process per se BUT it IS imperative that it IS setup properly for whatever it is you want it to do for your business. There is more to it than just moving your biz to another state like so many people seem to think.
It seems since I recently was affected by this, many people have been asking me what I'm gonna do about it. But what I need to happen might not be the same for many others in similar circumstances.
People need to get their own legal counsel for their own set of circumstances and THEN figure out their course of action. 😉
*** "On another note I just received an email from one of my merchants with a revised wording on their terms of agreement. It reads, “Affiliate shall not host any part of its website on any server or network located in the States of New York, Connecticut, Rhode Island or North Carolina. Further, Affiliate will not link with any party whose website or servers are located in the States of New York or Connecticut." ***
WTH ...
LOL ... NOT laughing because the situation is humorous, it's just that those merchants are obviously sooooo paranoid that they are actually resorting to trying to find where an affiliate's websites hosting services are located????? Has it REALLY come to that?
IF that catches on then some of those offshore hosting companies are gonna make a mint! I need to lease an island somewhere and setup an offshore hosting service. heh heh
Sheesh ... What next?!
Rick Wilson aka CorpRebel 8)
Seriously? Wow... Well in that case, what if someone in one of those states views their web page on their home pc. Does that also constitute a physical presence in that state? 😛 LOL
::shaking head::
DON'T give them any more ideas! LOL
I'm beginning to wonder if we are all in the middle of a Monty Python skit of the absurd.
BTW ... Where's Hostgator located? heh heh
Rick Wilson aka CorpRebel 8)
what does that second part mean, Mike?
Nan,
Not sure what you mean by the second part...In the second paragraph I've included the wording from the revised merchant's Terms & Conditions of whom I am an affiliate for and it specifically states if you host your website [affiliate website] in those states you will be in breach of the terms of agreements and they will disallow commissions and terminate any existing affiliate program.
Not sure if that answers your question.
Thank you, Lynn, for the balance & clarity...as usual, you can be counted on for that.
My Box of Soap:
Tempers are justly, forgivably hot and you've been misquoted
more than once in Jerry West's blog comments.
Yet I am glad that people ARE ranting at this stage.
While we still have some "free speech".
I believe that this is indeed part of a huge, rapid political sea change. Independence...personal freedom as well as privacy are always a threat to the most powerful political entities and therefore in great jeopardy right now. We internet marketers are like small landowners and farmers were 200 years ago. & Yes, it is important to be "legal"...when laws are just. But The Boston Tea Party was not legal in the eyes of the British Monarchy.
Read James Madison in the Federalist Papers.
Thomas Jefferson. "Experience hath shewn, that even under the best forms of government those entrusted with power have, in time, and by SLOW operations, perverted it into tyranny."
Well as someone mentioned...this is hitting FASTER than expected. A storm. Government as blunt instrument.
These days, the Internet is the voice of individual freedom, as well as a perfect tool for individual financial survival...globally. Back in the 90's I used to write grants to put internet and infrastructure into communities and schools. It was a passion. This internet is ours. We made it, the expression of our democracy. Messy and essential. A vehicle of freedom.
Let's keep it FREE!
I agree with you that one major positive to all of this is that it forces people to take notice, get educated on the details, and take action. It usually takes a personal experience or a very real fear to move people out of complacency, and into action.
As for "keeping it free" - again, the internet has never been a tax-free zone. We pay for internet access, we pay sales tax on products ordered from merchants within our state (where applicable), and we are supposed to report and pay sales & use tax on products we have shipped into the state (where applicable). The Amazon Tax simply shifts the responsibility of enforcement - unfairly.
As for the iTunes Tax, or the proposed sales tax on digital downloads... that one concerns me in regards to a "discriminatory internet-only tax" as outlined in the original Internet Tax Freedom Act. At the very least, the wording needs to be clarified.