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Affiliate Taxation – Time to Fight Back

Mar 20, 2009
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Unless you have been living under a rock, you are aware of California (and other) states efforts to copy New York and collect sales tax on affiliate initiated transactions. Collection of sales tax is important, and states are right to be concerned about taxes that are owed to them and not being collected.  But this is the wrong way to go about collecting this money and can easily cause more harm than good.

The California bill is Assembly Bill 178 sponsored by Assembly Member Nancy Skinner. The hearing date on AB 178 has been scheduled for April 13, 2009.

We all learned a hard lesson in New York.  Luckily that lesson is being applied right now in California.  Action needs to be taken now while the bill is still in committee.

The PMA’s Stance

The Performance Marketing Alliance has formed a committee led by the experienced Beth Kirsch who has done lobbying at the federal level.  She has been working with a coalition led by the Chamber of Commence and the California Taxpayer’s Association that includes the big players in the Tech space. This coalition has had success with similar bills in the past. With companies like Google, Yahoo, eBay, and CJ all based in California, there are a lot of big companies with vested interests that are taking actions either as part of this coalition or on their own.

The PMA is a valuable addition to this coalition because we can put a face on the issue.  We can get real people with real stories to talk about what this bill can do to them.  As such, the PMA is leading a grass-roots effort to spread the word about this to as many people in this industry as possible.  They have more in the works as well, with details coming out as they develop.  There are some more meetings today, and strategizing over the weekend.  After that, I expect to see plan laid out.

Likely there will be a need for people who can go to Sacramento, people to make appointments for in-person visits with their own representative, letter writers, and press outreach. If you can help with any of that, please contact the PMA to see how you can help.

Other Resources to Help Combat the Bill

There are other resources to check out as well. CAaffiliates.com is an ABestWeb forum for the discussion of the bill. Both Mark Welch and Scott Jangro have written excellent letter’s on the matter (Mark’s letter (pdf) and Scott’s letter) which I encourage you to read.

How Can You Help?

Discuss the bill with people. Let them know why it’s a bad idea, inform them. If you have a blog, make a post.  If you are on Twitter, Facebook, LinkedIn, etc. use them to spread the word and link to places where this is being talked about. Create discussion and make your voice be heard.

About Brad Waller

Some say Brad created the first affiliate program. We’ll never know for sure, but we do know that Brad has been running businesses online since 1994 and affiliate programs since 1996. When he is not running the affiliate program for EPage Classifieds, helping publishers monetize their sites with AdJungle, or working on iPhone applications, Brad is also busy starting up the Performance Marketing Alliance, a trade association created to represent and build the entire performance based industry.

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Filed under: Affiliate Marketing + Civic Responsibility + Internet Marketing + Media + News + Offline Affiliate Marketing + Sounding Off
  • Brook Schaaf

    Thanks for posting this, Brad. This is an important issue.

  • Stephen Robinson

    Hi Brad,

    Thanks for shedding more light on this issue. Appreciated reading Scott Jangro and March Welch's letters as well. Thanks for including in your post.

  • http://blog.mediatrust.com peter bordes

    Here it comes as predicted. this is going to be a state by state land grab to find money. it is imperative that everyone get going and rally around the PMA and fight this.

    This is a very serious issue and due to the PMA’s great efforts we have a good chance at stopping this dead in its tracks.IF everyone works as a group!!

    CA is in the top 3 of states with the largest affiliate marketing population.

    Spread the word ASAP there is not that much time. Drive everyone to the PMA site and they will be armed so everyone can bombard the State.

    Minnesota is now looking to do create a similar tax.

  • Beth Kirsch

    Guys,

    We'll have a website up in the next few days on what you can do to help.

    Beth

  • http://motiveinteractive.com brendan smith

    ready and willing to roll up the sleeves and go fist to cuffs on this issue. its something we all need to get involved in.

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  • http://affiliate.jwhco.com/ Justin Hitt

    After following a thread on affiliate taxation, I see two clear issues:

    (1) Taxation without representation: Levy of a tax on a business outside your state boarders for transactions in your boarders.

    (2) Possible double taxing, including sales tax on original purchase, then tax on affiliate commission to state of origin rather than simple income tax to state of residence.

    Since affiliates pay federal income tax and local state income tax on earnings, additional taxing conflicting with established laws.

    Best,

    Justin

    Ps. I'm rounding up affiliate marketers in VA to ready for supporting keeping taxing simple. These bills seem gateway to taxing mail order, catalog, and other cross state-line transactions.

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  • http://lisariolo.com Lisa Riolo

    How Can You Help?

    "Discuss the bill with people. Let them know why it’s a bad idea, inform them. If you have a blog, make a post. If you are on Twitter, Facebook, LinkedIn, etc. use them to spread the word and link to places where this is being talked about. Create discussion and make your voice be heard."

    This is excellent advice! If someone else sends a Tweet, please Re-Tweet. If someone starts a discussion in a LinkedIn, please comment on it. Comment on blog posts to help keep those posts getting high visibility. We need a groundswell of support and people need to come together on this issue!!

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