New York is currently in the process of repealing the so-called Amazon tax or affiliate tax. How this turns out could have drastic effects on affiliates living in the US.
What is the Affiliate Tax?
Back in May there was a law passed in New York that mandates online stores to collect sales tax on Internet purchases to state residents (you can thank Eliot Spitzer for this). The law is basically translated that if your an affiliate in New York you’re an extension of the online store and required to collect taxes. Amazon filed objecting to the new law, thus it was termed the Amazon tax. The law went into effect on June 1, 2008.
Overstock’s Casualties
Overstock.Com made headlines when instead of collecting taxes from their affiliates customers in NY, they decided to just kick out all the affiliates living in New York! Bad news for affiliates.
What about PPC?
Here is an excellent article interpreting the new law. You’ll be somewhat relieved to read that the law hinges on what determines the nexus of doing business in the state of New York. Apparently having just a referral link doesn’t create a nexus and using Pay Per Click is deemed as advertising and doesn’t fall under these terms.
Coverage
Funny, there seems to be little info covering the Affiliate Tax if you do a search on the web right now. Just a handful of bloggers and news sources even have anything on it.
Linda Buquet has extensive coverage of the New York Tax Law that can be found here. Shawn Collins of the Affiliate Summit has also blogged about it here and posted a video as well.
For those living in New York, there is also a blog post on what you can do now over at 5Star Affiliate Programs.
Why this is Bad
If the repeal fails, other states may take this as the green light to enact the same legislation. At the time, it doesn’t seem such a big deal, but I believe this could be the start of a slippery slope. Other states will want their piece of the pie and begin to enact the same legislation. States will get greedy and just blanket all affiliates affecting everyone in the affiliate world.
This can also bring back the issue of the so-called internet tax, then again maybe not …
Love to hear your thoughts, and would be interested to know if this is your first time hearing this …
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