Comments on: New Internet Sales Tax Laws Causing Major Issues for US Merchants & Affiliates

By: Lynn Terry

Lynn Terry — Thu, 22 Oct 2009 03:12:49 +0000

Good question, Dana – I’m not sure. I imagine the money wiring services are set up to handle this legally already, though.

By: tax inquiry

tax inquiry — Wed, 14 Oct 2009 15:37:06 +0000

Do you know what the laws are regarding state tax if a person purchases online but then PAYS in person at a third party WALK IN PAYMENT location? ie like a money wiring location? Nothing to do with an affiliate. Would the merchant be required to pay STATE tax in that scenario since payment is made in a physical location? some people without credit cards are making payments in physical locations for items purchased on the web-just wondering how tax might be affected in that case?

By: Stop ITFA

Stop ITFA — Wed, 30 Sep 2009 17:46:29 +0000

Stop kidding yourselves, big companies like eBay, Google, Amazon, Overstock, etc. are stuffing their pockets with dollars that belong to the state. Why should your local seller bear the burden to compete with a infastructure built by a few and used by all. These compaines that are not paying sales taxes are boosting about the “BILLIONS” of dollars worth of cash they are setting on. Stop crying and call your Congress and Senate and tell them to step up.

By: Rich Owings

Rich Owings — Sun, 19 Jul 2009 14:11:13 +0000

I’ve spoken with an attorney who specializes in Internet issues. He has reviewed NC’s pending legislation and we have discussed incorporating out of state and having a physical office out of state. But that isn’t enough — he believes nexus is based on where significant business activities take place. If the legislation passes, I’ll be talking to a sales & use tax specialist before implementing anything.

By: Rick Wilson

Rick Wilson — Sun, 19 Jul 2009 02:22:10 +0000

Hi Lynn,

It’s good to see this discussion continuing here. It needs to stay on affiliate marketer’s minds til this is resolved one way or the other.

Been reading the posts by Jerry West & Mike Young on their respective blogs about all this. Been running them by my atty earlier this evening along with Jerry’s “solution” post.

For me, my “legal counsel” says that Jerry’s solution, while probably very workable for him with HIS own circumstances, is not something he would recommend for me. It seems a bit more complicated than it needs to be for most people including me.

It seems that I might have a couple options to think about, though. But definitely have to form the company in another state and have related functions like banking, mail, phone in that state too. Even a company payPal account too! LOL

RI is such a non business-friendly state. So my whole online business entity will eventually be in that “other” state as almost all my online income is from affiliate marketing & my day trading. My biz entity is actually pretty simple for tax purposes. ALL Form 1099s. heh heh

It’s definitely gonna get ALOT more interesting when I finally get this set up. NOW … IF only I can just get my “legal eagle” back from jetsetting around Asia with his wife, then I can get this deal started! LOL

Have Fun All!

Rick Wilson aka CorpRebel

P.S. Remember … You really need to get legal advice from your own attys & accountants so you can figure out what’s best for YOUR business!

By: Rick Wilson

Rick Wilson — Sun, 19 Jul 2009 00:34:59 +0000

Hi Nan,

Did that “NC associate” say that because it’s just his opinion OR did they actually talk to their atty or tax accountant and get a “legal” opinion?

While Jerry West’s solution probably will work for “his” particular biz setup, most likely isn’t a solution for most people with this issue.

Remember … there IS a big difference between “tax evasion (tax fraud)” (for taxes owed) and “tax avoidance” (properly done is perfectly legal).

IF a company doesn’t like a state’s tax rate they’re certainly within their rights to move to another state with lower taxes which is “tax avoidance”. Nothing wrong with that.

ONE thing people need to understand …

There is NO single “cookie cutter” solution that will work for eveyone. Everyone’s setup is a bit different. That’s why everyone should discuss this with their own atty and accountant and THEN make a decision which way they need to go.

And when I say attorney, I mean an attorney that is actually qualified at dealing with these issues. Usually your divorce lawyer or general lawyer are probably not who you need to talk to. heh heh

And yeah, I know … This whole issue “bites” but we need to deal with it. It’s NOT going away. :-/

Rick Wilson

By: Mike Hays

Mike Hays — Sat, 18 Jul 2009 19:12:05 +0000

I agree on several points that Mike Young makes i.e having separate bank accounts for two different corporations, but at the same time he takes a nasty tone attacking Jerry West. I’m also disappointed in Mike Young’s solution to this ongoing problem. As an Internet attorney I feel his solution is weak. Especially the third alternative, “Order a copy of Ayn Rand’s “Atlas Shrugged” or Harry Browne’s “How I Found Freedom In An Unfree World” via Amazon and ship it to the New York State Department of Taxation and Finance.” How would you feel if you went to an attorney who is charging you $150 to $700 an hour and he told you to go read a book?

Just because someone says they are an attorney should you believe everything they write on their blog? There has been a lot of bad advice passed on by so called “expert” lawyers. I think that is why we are in this mess right now.

One of the reason we have so many law suits in America is because there are different interpretation of the law by laypeople and attorneys. I think it is self righteous to criticize someone for their opinion and to accuse them of “practicing law”. I believe Jerry was following the advice of his attorney and tax accountant and was merely listing a solution that his team came up with. I’m not going to argue if the advice was good or bad, I’m neither a lawyer or tax accountant. As a consumer and Internet Marketer I do feel it is my responsibility to obtain the best possible solution to a problem and that includes listening to the advice of people like Jerry West and Mike Young. I would then take those opposing views and seek my own attorney and accountant of whom I trust and together come up with a viable solution that fits my needs.

By: Lynn Terry

Lynn Terry — Sat, 18 Jul 2009 15:23:28 +0000

Thanks for the link, Mike – just read it. Your thoughts?

By: Mike Hays

Mike Hays — Sat, 18 Jul 2009 00:54:27 +0000

I thought this link was rather timely from an attorney disputing Jerry West’s Amazon Tax solution.
http://mikeyounglaw.com/wp/2009/07/17/amazon-affiliate-tax-jerry-west-bad-solution/

By: Mike Hays

Mike Hays — Fri, 17 Jul 2009 18:24:39 +0000

Nan, not to be disrespectful but of course they are going to scream “foul”. That’s like calling the IRS and asking them for tax shelter advice. The reality is there are many businesses including fortune 500 companies that have incorporated in other states. The best advice that has been already discussed is to talk to an attorney who specializes in setting up and running corporations in other states. Garratt Sutton, a well know corporate attorney in the state of Nevada has already started working with businesses from many states to resolve this very issue.

By: nan

nan — Fri, 17 Jul 2009 16:37:25 +0000

I sent that “solution” to a NC associate struggling with this and this is his take on it:
That’s called tax fraud. If the state finds out he is doing a significant portion of managing websites from in NC, it will establish nexus for Amazon. The state will sue Amazon for back taxes and Amazon will sue him for the same amount, since he is the cause.

By: Lynn Terry

Lynn Terry — Fri, 17 Jul 2009 15:23:24 +0000

Jerry West has posted a new video:

Amazon Affiliate Tax Solution
http://blog.seorevolution.com/2009/07/17/amazon-affiliate-tax-solution/

Check it out!

By: TX CHL Instructor

TX CHL Instructor — Fri, 17 Jul 2009 13:48:54 +0000

The business of strong-arming others to do your work for you was learned from the federal government, which has imposed enough unfunded mandates on the states that there are a few of them (most recently, Alaska) actually starting to call them on violations of the 9th & 10th amendments.

By: Lynn Terry

Lynn Terry — Fri, 17 Jul 2009 13:31:07 +0000

There seems to be a lot of confusion over the Affiliate Tax, or the Amazon Tax as it’s been nicknamed. People are ranting and raving over an additional tax burden, when actually it’s just an issue of enforcement.

When you buy a product from out of state, you dont pay your state sales tax on the invoice. If you buy a product from a merchant or company IN your state, you do. Right?

What a lot of people don’t realize, its that you’re still supposed to pay sales tax on those purchases – you just pay it to the state, instead of to the merchant. Except it’s called “use tax” after the fact.

A couple of good references – look up Use Tax on Wikipedia. Or google the phrase “calculating and reporting use tax in new york”.

This is not a new tax. This is a few states’ roundabout way of trying to enforce the use tax, by getting the major online retailers to collect it for them – even though they dont have a nexus or a physical presence in that state.

Apparently the state of New York started adding the use tax as a line item on income tax returns, as a means of enforcing collection of this tax. Two other states, Michigan and Utah, tried this in 2001 and reported tax revenue of $3.1 million and $250,000, respectively.

Here’s the interesting note: compliance percentages (taxpayers who reported and paid a use tax) for 2001 were 1.6% in Michigan and 0.58% in Utah. And of course it’s up for debate as to whether those few reported accurate numbers.

It’s not Amazon’s job to collect sales tax on sales made to buyers outside their home state. Other states are attempting to force them to, saying that since they have affiliates there – that represents a physical presence.

But since they obviously can’t seem to get their residents to report and pay the tax, they are trying to strong arm the merchants into doing the paperwork for them.

So it’s not a tax that Amazon – or any other merchant – pays. It’s a tax they collect, and then turn over to the individual states. Each state having a different sales tax rate of course, which creates an unfair bookkeeping burden on the merchant.

By: Ryan Healy

Ryan Healy — Thu, 16 Jul 2009 22:05:58 +0000

Government always likes to target “big guys” first because then all the little guys get behind the new laws.

“Yeah, they’re making too much money. Let THEM pay more taxes.”

But it’s all just a set-up before they go after the little guys. Give an inch, give a mile. Next thing you know, everybody is paying the tax.

I find it very encouraging that Amazon and Overstock have basically said “Screw you!” to states who’ve tried to grab more money. That’s the silver lining, and that’s what we should be focusing on.

Ryan