65 Comments

Illinois Gov. Quinn Flaunts “Fairness” in Passing Nexus Tax, Cuts off Nose to Spite Amazon

Mar 10, 2011
by

Even grown men can act like small boys. Instead of making a business decision that would secure the position of Illinois as a state that welcomes the tech community, Illinois Governor Pat Quinn has decided to sign ill-conceived affiliate nexus bill HB3659 out of “fairness”. Specifically a member of Governor Quinn’s office who wished to remain unnamed stated that Pat Quinn had made the decision because it was “Amazon that was being unfair.” So like a petulant child Governor Quinn is lashing out at Amazon. Who he is truly hurting are dozens of small business owners in Illinois.

The misguided affiliate nexus portion of bill HB3659 was introduced by Senator John J. Cullerton (D), Illinois’s version of the so-called “Amazon Tax” which forces out- of-state retailers to collect Illinois state sales tax for Internet sales, based on the premise that affiliate marketers create a tax nexus. The bill was heavily fought against by ShareASale, Google, Performance Marketing Association, and TechAmerica.

What is truly tragic about Governor Quinn’s decision to ratify this bill is that not one penny will be collected from Amazon. As in other states that have passed such measures Amazon has already notified its affiliates that it plans to terminate relationships with them (we expect that to happen today). Other merchants like Overstock will likely follow suit. Amazon and the other merchants will still make money in Illinois by selling through other marketing channels.

So who gets hurt by Governor Quinn’s skewed concept of fairness? Dozens of publishers, website owners, small business owners in Illinois that rely on affiliate marketing as a form of revenue. Quinn’s “fairness” will cause job loss and an increase in unemployment. He is inflicting damage on his own constituents. Now there’s a model for fairness not to mention fiscal logic!

What this debacle in Illinois proves is that big box retailers have mustered a lot of lobbying clout and are willing to stomp on small business in order to gain an advantage over internet competitors. Governor Quinn is just gullible enough or greedy enough to lend validity to their lobby.

Retail giants like Wal-Mart are already wooing discarded Amazon affiliates. It’s only a matter of time before pro-tech states start wooing small business hurt by Governor Quinn away from Illinois.

 

 

About Angel Djambazov

Born in Bulgaria, Angel Djambazov has spent his professional career in the fields of journalism and online marketing. In his journalistic career he worked as an editor on several newspapers and was the founding Editor-in-Chief of Wyoming Homes and Living Magazine. Later his career path led to online marketing where while working at OnlineShoes he earned the Affiliate Manager of the Year (2006) award at the Affiliate Summit, and In-house Manager of the Year (2006) award by ABestWeb.

For four years Angel served as OPM for Jones Soda for which he won his second Affiliate Manger of the Year (2009) award at Affiliate Summit.

Currently Angel serves as OPM for KEEN Footwear and MedicalRecords.com. His former clients include: Dell, Real Networks, Jones Soda, Intelius, Graphicly, Chrome Bags, Onlineshoes.com, Vitamin Angels, The Safecig, and Bag Borrow or Steal.

Angel is the Editor-in-Chief and Co-Publisher for ReveNews.com and ReveNews.org.

Angel lives north of Seattle, spending his free time reading up on obscure scientific references made by his wife MGX, while keeping up with a horde of cats and a library of books.

You can find Angel on Twitter @djambazov.

Filed under: Affiliate Marketing + Legal Issues + News Briefs + Performance Marketing + Taxes
  • http://www.whatdoesjoethink.com Joe Sousa

    Ugh. This wasn’t the news I wanted to wake up to today. So sad for all my Illinois affiliate marketers. I say we all pitch in, buy an island somewhere and move.

    • Leslie_e_white

      Joe, I hear you, good luck with the change. leslie White

  • http://www.thehotiron.com/ Mike Maddaloni – @thehotiron

    Greetings from the Windy City… and the breeze is the people leaving the city and state of Illinois.

    This story was barely covered in the local news here in Chicago, namely as the media was too busy covering the Wisconsin legislators who escaped here, and Charlie Sheen. Not to mention our former governor who has finally ran out of money from his time on The Apprentice and decided to take his sentence for breaking the law, but I digress.

    I could go on and on, but in Illinois, and especially the northeastern corner here in Chicago, they love taxes. If I cross the border to Indiana, gas is about 50 cents a gallon cheaper. Cigarettes are over $10 a pack. When I moved here in ’04, the sales tax was 7.75%, and today it is 9.75%, though it will go down to 9.5% later this year. Did I mention the massive income tax increase Quinn put through the same-party legislature?

    Prior to being governor and previously lieutenant governor, Pat Quinn never held a for-profit job. He was a “community activist” and never really had to work hard to earn a dollar. Thus he thinks all businesses are bad, and they need to be held accountable for making money, as they must be doing bad things to make a buck.

    Ironically, I moved here from Massachusetts, a state which I thought was bad enough. When New Jersey governor Chris Christie said last week that Pat Quinn is a disaster, he was barely scratching the surface.

    So where do I move to?

    mp/m

    • http://www.jeffmolander.com jeff_molander

      Spot on, Mike. Thanks for sharing my pain (I’m in Chicago too) but more importantly painting a very accurate picture of “life in Chicago.” Where our media report on “Free rides for Seniors” on public transportation but not how we’re getting gaffed on a sales tax increase. SALES TAX. What’s more disappointing than our politicians? Our “media.” But then again, it’s our appetite for “news” that keeps them in business. Wake up Chicago!

      • http://www.thehotiron.com/ Mike Maddaloni – @thehotiron

        Ah, misery loves company Jeff – good to hear from someone else here on the shores of Lake Michigan.

        Unfortunately the pols here don’t want to do the unpopular things – make cuts – and as a result they pass such laws. The pols listen to who gives them money, and entrepreneurs and small businesses don’t give much if all as we’re struggling with our own businesses.

        As much as the media doesn’t cover things, the people don’t get out and vote! But unfortunately that’s not just a problem here in Chicago…

        mp/m

  • Pingback: Somehow, Illinois becomes less business friendly | Joe Lilly

  • http://www.affiliatefairplay.com Kellie Stevens

    Not only will they most likely not collect any additional sales tax, as has been proven in other states, the State of Illinois is likely to end up footing some legal bills connected with the passing of this bill. At least if they try to collect anything from Amazon. It’s what has happened in other states already.

    Illinois has an awful lot of affiliates as well, so the impact will not be insignificant. :(

    Hats off to all those who worked really hard to combat this legislation. Unfortunately, there are times that politicians have their minds made up and don’t want to hear anything contrary to their preconceived plan.

  • http://twitter.com/Trust Trust

    This is being fought all wrong. It’s pretty pathetic when we’re supposed to be a bunch of marketers and not getting the word out of this.

    First off. To this day, I’m logging into networks and not seeing information on this. Affiliates login daily, the info needs to be there.

    Linkshare – Where? I see under Announcements:
    Affstat Survey
    Scheduled Maintenance
    Scheduled Maintenance
    Affstat Survey

    CJ
    nothing on the home page
    login, nothing

    GAN
    nothing on home page
    login, nothing about this under Announcements

    Shareasale
    same as above, nothing

    What’s with all the private stuff? Google groups and such? Private here, private there? This should be SHOUTED, aka get the word out, marketing. I’ve heard, we don’t want our strategy out there. Isn’t it the same strategy used elsewhere? So it’s already out there. And then, we’re in the right. This leads to net loss for the state. Passing this stuff hurts business. Nothing is gained. I’ve watched a couple of broadcasts now, the Colorado one and the Minnesota one and these message aren’t hit on hard enought.

    • Samantha

      Just a heads up, this is actually on CJ’s homepage. There is a link under news & events called “Internet Tax”
      http://www.cj.com/news/internet_tax.html
      You can see a map of the US with states showing where legislation is at in each state.

      • http://twitter.com/Trust Trust

        I don’t think I’ve ever clicked that link in the 9+ years I’ve been with CJ. It needs to be above the fold, right where people can actually see it. Not hidden in a drop down menu that nobody uses. There’s room on the nav bar between About Us and the search box. Put it there, make it a different color so it stands out.

        Or, right after I login, under Messages, there should be something permanent there.

        It needs to be where people can easily see it.

        The other networks need to do better as well.

    • Pat Grady
      • http://twitter.com/Trust Trust

        Who reads network blogs? Needs to be on home page or right in front of you after you login. Here’s what affiliates do everyday. They go to these networks and login to get links, check how much money they made etc. That’s where it needs to be.

    • http://www.affiliatefairplay.com Kellie Stevens

      It is my understanding that some networks have indeed put up such notices on login. Those messages appeared for affiliates in the state that was at issue at the time, since those were the affiliates needed for the messaging. If you aren’t in a state that was potentially impacted, then it you wouldn’t have seen it. I’ve heard of networks who reached out directly to some affiliates (eg phone calls). All kinds of outreach is possible. Just because you didn’t see it personally in one particular form doesn’t mean it hasn’t happened.

      All wrong? Sure some things have passed. But there have been other cases where legislation was blocked. I think more legislation has been blocked or the affiliate verbiage removed from the final legislation than Nexus laws passed.

      I’d say that because of the coming together and very, very hard work by MANY in this industry, there have also been some definite victories of us. If not for the efforts by some very committed people in our industry, there would many more states with affiliate nexus laws than right now.

    • http://www.jeffmolander.com jeff_molander

      Hmmm. Damn. I hate when that happens. I just read your yammering here, Trust. You’re right. You support my point. Damn you! :) Now I must retract my “pointless” label. You have a point. Mine. Oh, that must really sting.

  • http://www.jeffmolander.com jeff_molander

    Angel, love you man. We’ll break bread soon too at my pad, I hope. But…

    1) Why is this not Amazon’s fault? How is it fair for Amazon to do this to small business owners? Quinn/Illinois isn’t the decision-maker on this. Amazon is. Rather than pass the cost on to consumers they’re releasing affiliates.

    2) How will this increase unemployment?

    3) How will this cause job loss?

    What am I missing? And I ask because I’m confident I am missing something.

    • http://www.affiliatefairplay.com Kellie Stevens

      Quinn/Ill aren’t the decision makers? They are the ones who put forth the legislation using affiliates as the linchpin for grabbing some tax dollars. And as Brian so succinctly put it..what they put forth is not Constitutional. And they should know it’s not Constitutional. I don’t see how it is Amazon’s fault that there are politicians acting like money-grubbing, unconstitutional buffoons.

      2) & 3) I’ve already seen postings of the termination letter from Amazon sent out to Illinois affiliates. That equates to decreased revenue. That can lead to unemployment and job loss. Of course, it’s not JUST Amazon, although the politicos seem to love targeting Amazon..something else they are no doubt aware of as well.

      • http://www.jeffmolander.com jeff_molander

        Respectfully, my questions remain unanswered, Kellie. But you’ve given me some new ones now.

        1) How is it unconstitutional? I’m not challenging you. I’m just asking. In a few words, on what grounds?

        2) Everyone is acting surprised that a state which is among the most “financially screwed” would grab at generating tax dollars. I’m not. I’ve never been. And this isn’t a democrat or republican thing either. Government has grown and grown and grown under the leadership of both parties. Are you surprised? Why?

        3) Amazon’s letter (I’m an Amazon affiliate in Illinois, so I read it) is insulting to the intelligence of the entire industry.

        “… a new state tax law signed by Governor Quinn compels us to terminate this program for Illinois-based participants. It specifically imposes the collection of taxes from consumers on sales by online retailers – including but not limited to those referred by Illinois-based affiliates like you – even if those retailers have no physical presence in the state.”

        And? How is this compelling to terminate affiliates? It’s compelling to charge tax. Amazon is the one terminating affiliates. By choice.

        “… It was supported by national retailing chains, most of which are based outside Illinois, that seek to harm the affiliate advertising programs of their competitors.”

        Let me translate: “Waaaaah.” Give me a break. This from Amazon? This is how they speak to valued affiliates?

        “… if this situation is rectified, would very much welcome the opportunity to re-open our Associates Program to Illinois residents.”

        Rectified by whom?

        Look — I’ll be really candid. And I hope to hear some response on this to the above questions and this one too:

        Why are we so quick to act like Affiliate Marketing Tea Partiers? Why is there so little substance behind our concerns? Why do we call politicians such venomous names and cry “unconstitutional!” without any kind of real dialogue about how that might actually be true… and in the face of so much precedent?

        Kellie (and others)… you’re much more studied and active than I am. So I ask these questions out of respect and honest curiosity. Thanks for considering them.

        • http://www.affiliatefairplay.com Kellie Stevens

          1) Quill vs North Dakota and The Commerce Clause. Reference http://en.wikipedia.org/wiki/Quill_Corp._v._North_Dakota There’s another case as well but I can’t remember the name offhand.

          2) I’m not surprised at all by it. :) Unfortunately. :( A lack of surprise doesn’t make it legal. I do agree it is bipartisan.

          3) Amazon could collect the taxes, but it is quite obvious they don’t have any intentions of complying with something that they strongly believe is illegal. You are entitled to your opinion that Amazon should just go ahead and collect the tax for the sake of their affiliate relationships.

          The other part of the picture that you may not be considering is that Amazon is fighting these laws legally. I wouldn’t be any more surprised that removing themselves from any responsibility of collecting the tax is a legal strategy as well in ongoing litigations. Of course, as an someone who got the termination letter, you may still feel that Amazon should just comply.

          Side note: Amazon has also legally fought States who tried to get them to report consumer information to States with regards to sales tax collection which potentially violated consumer privacy laws. (eg Colorado where Amazon won the first round. Not sure but Co might be appealing).

          Rectified by whom? I’d think either a) repeal of the law by Ill or court.

          “Why do we call politicians such venomous names and cry “unconstitutional!” ”

          The First Amendment? Just lightening it up. :) The fact that it is unconstitutional (see reference above) for a State to dictate such tax legislation to a business who doesn’t have a presence in their State is VERY substantive to me. I take the Constitution seriously. As citizens, we are expected to obey the law, yet our law makers, who such even more familiar with the law, seem to think they are exempt when it’s convenient. I’m not surprised by that particularly but it lends itself for venomous commentary, at least by me. I’ve never suffered politics well.

          • http://www.revenews.com Angel Djambazov

            Kellie, did I ever mention how much smarter than me you are? Good job of laying out the argument.

          • http://www.jeffmolander.com jeff_molander

            I just read your other reply, Angel. Hold on a minute. Amazon has a shipment warehouse here. Isn’t this the same battle that catalog companies fought and LOST over the years? Or at least I think they have one here. I know Buy.com has one. This is central to the nexus argument.

          • http://www.revenews.com Angel Djambazov

            Location of Amazon Fulfillment Centers in the US:

            Phoenix and Goodyear, AZ;
            New Castle, DE;
            Whitestown and Plainfield, IN;
            Coffeyville, KS;
            Campbellsville, Hebron, Lexington, and Louisville, KY;
            Fernley and North Las Vegas, NV;
            Nashua, NH; Carlisle,
            Hazleton, Allentown, Lewisberry, PA; Chattanooga, TN;
            Sterling, VA;
            Bellevue, WA

          • http://www.affiliatefairplay.com Kellie Stevens

            RE: Illinois Distribution Center http://en.wikipedia.org/wiki/Amazon.com#Fulfillment_and_warehousing Not sure how accurate that information is, but it doesn’t look like they have one.

            Amazon just closed the one in Tx (or announced it and it will be closing in the very near future) after they got a tax bill from the State of Texas because of the center. Amazon’s side seemed to be that it was a subsidiary who owned the warehouse. I’ve no idea how much difference, if any, that makes.

            Regardless, this law wasn’t about a distribution center by Amazon, but saying that affiliates constitute a nexus.

          • http://www.qaqn.com Daniel M. Clark

            But it *does* demonstrate that Amazon is simply interested in avoiding paying taxes at any reasonable cost. The distribution center is a no-brainer. They should be collecting here in Texas. They should be collecting in every state that Angel listed just below… do we know if they are?

            The more this plays out, the more it looks like Amazon really does just want the advantage of tax-free shopping. They’ll close distribution centers, fire affiliates, anything to avoid having to collect the sales taxes that comparable companies – Walmart, etc – are already collecting. As long as the hit to their bottom line isn’t too great, they’ll do what they can.

            Are these taxes constitutional? That depends entirely on interpretation. We have a lot of laws on the books that can be considered unconstitutional but have never been challenged. And I’d argue that one court case (Quill/ND) doesn’t exactly make for an airtight defense for us.

          • http://www.jeffmolander.com jeff_molander

            Quill. Ok. That’s the piece I’m missing. Many thanks. I actually recall that case from many years ago. And I remember blogging about how twisted a judge would need to be to make a Nexus interpretation. Aaah, yes, the Ignorance Economy. Which dovetails…

            Angel, no harm intended. But I just like to ask, “what does this earn me?” every so often. And those who’ve known me over the years know what I’m talking about.

            I read this post and wondered, what does this earn affiliate marketing? I wonder. In my humble (again, I’m an affiliate marketing nobody) opinion it earns the industry much of what it’s earned it in the past. But that’s just my opinion.

            Again, Angel… you’re a blogger. A good one. And this is all about getting read. And expressing yourself. And appealing to affiliates. And what you believe in. I’ve got all that. I do much of the same myself. I just find it disappointing that — given Quill v. ND and such **well reasoned** arguments we’re still here. It’s shocking actually.

            And I still don’t let Amazon off the hook. The SPEED at which they’re letting go of affiliates signals they don’t value them much anyway. And the words they’re using are demeaning, insulting.

          • Brian Littleton

            Jeff,

            Your questions are being answered, if you read what we are writing you’d see at least some answers.

            Tim and Scott – if you knew how involved and affected they are you would not be calling them out. They, as well as every affiliate marketer in Illinois has serious decisions to make.

            If you do not believe me, I suggest you follow some of the advice you have given over the years and give them a call – the answers you get to your questions will likely help your understanding on this issue.

            People’s jobs are at stake – I don’t know what else to tell you besides the fact that it is a true statement.

            Before calling Amazon the bad guy – ask yourself this. If you had a lawyer in Arizona – whom you like and did good work – and Arizona called one day and told you that based on the existence of this lawyer, you owed a tax return to Arizona.

            You would fire the lawyer in about 2.2 seconds and avoid the “nexus”. You’d see that the state was over-reaching their bounds and you would avoid whatever they were asking you to do.

          • http://www.jeffmolander.com jeff_molander

            Some are being answered, yes. Brian, I’m calling them out because I don’t know. That’s right. And candidly I don’t have the time or interest to call them up. I wish them well but this isn’t mission critical to me as it is you.

            How are people’s job at stake? Again, this sounds good but it’s simply not true. Nobody has fired anyone or let them go… people aren’t going without work. They are going with less revenue. I’m not arguing that. But let’s fight fair — or look like foolish blowhards. That’s my point.

            I’m quite serious. Why doesn’t Tim or Scott BLOG about how bad it is. Why doesn’t an affiliate blog about how bad it is? How many people are going without work. How much revenue they’re losing. Wouldn’t that be a better way? Wouldn’t SHOWING lawmakers be a better way?

            And I understand tax avoidance, Brian. Fully. But the industry lays full blame on States. Why? I think it’s a FAIR question and also a PURPOSEFUL, worthwhile question. Why is it so difficult for anyone to even agree is valid? **Why are businesses entitled to tax avoidance??**

            This leads me to the Tea Party analogy. Which is really going nowhere outside of shouting and blaming politicians. Doing that is easy. Finding a workable solution to the problem is real work. It seems to me that fighting this based on legal precedent is essential. Everything else is just noise. If the nexus issue has merit (and it does — I’ve said that from the start) then FOCUS on it and NOTHING else.

            Look — so far this shit has been going on for YEARS. And it’s not stopping. The solutions that the industry has come up with do not work. Blaming and lobbying politicians has FAILED.

            Nobody gives a hoot about the plight of the little guy. Fight fire with fire. The industry should consider a different approach. But, again, this takes time and **coordination**. Unity. Discipline.

            Anyway… I’m just giving you all something to think about. And I appreciate the time investment Kellie and Angel have made in helping bring me up to speed. And I appreciate “Trust” being… well… so steadfastly anonymous, defensive and pointless.

          • http://twitter.com/Trust Trust

            For Jeff

            I appreciate your consistency over the years with your inability to pick concepts up and your comprehension issues.

            “The solutions that the industry has come up with do not work.”

            At least you’ve picked up something from me today, what I’m been posting about.

          • Pat Grady
          • http://twitter.com/Trust Trust

            Very deep response there Donuts.

          • Brian Littleton

            Jeff,

            Scott released a press release today – you might want to check that out.

            Here: http://www.sunherald.com/2011/03/10/2932809/couponcabincom-comments-on-gov.html

            At the bottom it talks about how they are being forced to look to Indiana. Moving a company. Of 50 people! Would that not indicate to you how serious the problem is … staying in Illinois would costs jobs at his company, so real is that threat that he is instead looking to move to Indiana. Think about that…. Indiana.

            If, as you write, you are so disinterested and out of the loop I’m not sure why you are arguing that things aren’t happening that really are.

            If it really interests you, feel free to follow up to get some facts. A lot of what you are suggesting was in fact done here in Illinois. We had countless discussions with politicians, leaders, opposition, the Governor, etc… … detailing exactly what was at stake and how the job loss happens. We fought as hard as we could and if the Governor could speak honestly I bet he would tell you that this was a very difficult decision and that our industry did represent ourselves very well. I can’t speak for him – but that is my belief.

            The people who are affected in Illinois are not kidding – the results are real and being told that they are somehow figments of our imagination is disheartening.

          • http://www.jeffmolander.com jeff_molander

            Brian, it’s not my job to get facts in comments at Revenews. And let’s be clear. If someone has lost their job it’s yet to be discussed here or known to me. Hence, in my world, nobody is actually losing their job. Not yet. Period. This is not to say that I don’t care. I do. So please remember you don’t get to determine if I care or not… or if I care “enough.” I’m not judging you. I’m just stating my opinion.

            Everyone is saying job loss is what this misguided law will lead to. Will it? We’ll see. But to say it’s happening or is certain is more bluster. It isn’t furthering the cause.

            Also, you’re proving my point: far fewer knew about Scott’s situation until just now. I’m not sure why you’re berating me for not knowing. Very few know. And hence very few care about CouponCabin, a fine Illinois success story.

            Scott is hurting. But he’s blustering. If he moves he moves. If he stays he stays. Like I said too few people actually care enough to make change. By now that should be obvious to “the community.”

            What does Scott earn with this statement? What do we earn with all of these claims — these certain bad things? That’s my concern. Scott’s ACTIONS (moving the company as he says he will) would generate more interest — would force legislators to re-think.

            Or someone writing a story about what is actually happening — putting some substance behind the statements that say “Illinois won’t see any revenue from this.” Isn’t that a constructive thought, idea or project? I’m offering it. Not berating people for not having though of or done it.

            Because in the end “I’m thinking about leaving the state and taking a few dozen employees with me” is not moving the needle. Experience proves this. We keep doing the same thing, earning the same result and keep expecting (hoping for) a different outcome.

          • Brian Littleton

            Jeff,

            If you’ll admit that there are a whole bunch of people in Illinois who know way more about what really happened and what was done/said/reported…. I’ll admit that yes, we could have done more and done things differently to try to engage public opinion.

            I’m way to tired and angry to get into a “start-over” debate over what the consequences are of this legislation.

          • Anonymous

            Quill is not as cut and dried as you make it sound. The decision in Quill was that of computer software, and therefore, floppy disks located in state as defining a tax nexus. If you read the text of the IL bill, it defines offices (including offices of affiliated companies) as creating the tax nexus.

            The comparison would be more appropriate if the IL bill dealt with where servers were located, but that is not the case. It talks about where work (with humans) is being done, including work (by humans) done by affiliated companies to create sales for the seller.

        • http://twitter.com/Trust Trust

          “Why is there so little substance behind our concerns?”

          Jeff, let me answer that with a question for you.

          How are lost jobs, lost income good for a state?

          • http://www.jeffmolander.com jeff_molander

            What are you a politician? :) What makes you think I’m going to answer the Affiliate Tea Party question that has no bearing on mine? Also, Trust, isn’t it time to use your real name? I mean, it’s been like a decade of service you’ve provided Revenews :)

            Oh — and nobody has answered my question yet. How does this create unemployment and job loss? I mean, that sounds good and all. But it’s curious that nobody has a) explained it b) feels it necessary to explain it c) rally behind it and d) shown me a single case of job loss.

            Tim Storm. Paging Tim Storm…

            Scott Kluth. Paging Scott Kluth…

            There. The biggest affiliates in all of my proud state have been paged. Now let’s hear about the layoffs from them.

            For those still reading and not laughing. Sorry. I tried. For those interested in watching me be schooled. Sorry, again, and scroll down for Kellie’s very astute points regarding what’s really at stake here and why it’s important. I bow to her.

          • http://twitter.com/Trust Trust

            You’re always getting schooled Jeff, nothing new there. I’m here to help.

            Lost income – Well, if a merchant drops you, you can’t make money with that merchant anymore. Simple enough to understand for most people.

            Lost jobs – Well, if a merchant drops you, less income. Which can result in employees of some major affiliates getting let go. It can result in some major affiliates moving out of state.

            Another real life example. It can also hinder businesses from moving to your state. With me, I would love to live in NC. The only thing keeping me from living there is this nexus tax.

        • http://www.revenews.com Angel Djambazov

          I am not a fan of Amazon or Overstock using affiliates as political bargaining chips. That tactic is no different than Wal-Mart’s tactic of backing this “main street fairness” bullshit. Also Amazon’s treatment of their affiliates, especially over the last two years, has been less then stellar so their “insulting” letter is hardly a surprise.

          But @Brian is completely right on this, the law that passed is unconstitutional. Amazon does not have a physical presence in Illinois, it does not benefit from services provided by the government of Illinois, it should not be taxed. Nor does Illinois have any right to tax it: Quill Corp. v. North Dakota is the relevant Supreme Court decision.

          Businesses in Illinois who happen to be affiliates are not part of Amazon nor are they proxies for Amazon. However it is those small businesses that Governor Pat Quinn has hurt by passing this bill.

          Furthermore affiliate marketing, as you know, is simply one of many marketing models (PPC, CPM, CPV), why tax one but not ANY other model? Confusion over terminology may be part of it initially. But an affiliate for Amazon is NOT like an affiliate for a radio or television station. However, again @Brain, is right that the influence of the big box retailer lobby is what really trumped in this case.

        • Allan Smithee

          precedent: “Quill v. North Dakota, the U.S. Supreme Court ruled that retailers are exempt from collecting sales taxes in states where they have no physical presence, such as a store, office, or warehouse.”

          I have no illusions that amazon is doing this to help the ‘little affiliate’ etc. It’s just for (selfish) business reasons. But why should they go along with these states? Just to be nice???

          I don’t have a big problem, with states going after the tax money they owed, too bad this way doesn’t work.

  • Brian Littleton

    @ Trust,

    If you are serious then I am disappointed in your response.

    People have fought hard, tough battles and spent countless dollars on this – people that I know in Illinois as well as New York, California, etc…

    To say that it is all being done wrong may be accurate – but I think it is time to look in the mirror and see how you’ve helped if you are going to cast stones. From where I sit, there are a whole bunch of people doing a whole lot of work. If you think it is being done wrong, go out and do it better.

    @ Jeff Molander (Hi Jeff)

    I can only hope that you are joking or playing the devil’s advocate here…

    Amazon at fault? They are an out of state company. By law of the US Constitution they are not required to do what is asked by States unless they have a physical presence. Fighting for their rights is hardly evil… it may hurt, but they are within their rights as how the law stands currently.

    Even if you thought that Amazon’s business practice was a bad one – and I do – the Governor knew what would happen (not just with Amazon but hundreds more) and still signed a law that he (and the Illinois Retail Merchants Association) knew would not do the job they wanted it to do. They all know it doesn’t work, and they all know that it costs us huge chunks of revenue.

    A Governor of a State is supposed to have the businesses of that State in mind. Not the national agendas of giant corporations. That is why it is a failure of government and not of one retailer.

    If you really feel that Amazon is at the core of this problem, you should ask yourself what you would do if some State… say Texas, called you up one day and said that they decided that you owe income tax to their State because you visited there last year. Ask yourself whether you would just agree to that – or maybe you would fight for what you think is right.

    2) Just ask the businesses in Chicago and around Illinois that will now have to either release people or move jobs out of Illinois. That should give you your answer on unemployment.

    3) Same. When an Illinois affiliate with 50 employees for example, loses 40% of their revenue…. what would you expect to happen????

    • http://twitter.com/Trust Trust

      I am serious. It’s not casting stones, it’s pointing out the obvious. I’m not saying people aren’t putting in work, I’m saying things can be done better. Info should be on the homepage or an easy to find link to the information. Take down the old Black Friday links (4 months old) you have up after I login, put links to this issue. Front and center.

      And yes, I think it is too secretive and private. I see complaints about lack of interest and turnout, well, then get the word out. I think we’re in the right. Need more turnout, interest, input.

      “If you think it is being done wrong, go out and do it better.”

      If it gets to my state, we will.

      • Allan Smithee

        The reason you don’t see this being shouted from the networks home pages? er-

        “Sears Holdings Applauds Governor Quinn for Signing E-Fairness Bill”,
        “Wal-Mart welcomes Amazon and Overstock Illinois Affiliates”
        “This bill helps Walmart, Target, K-Mart etc”

        These companies are all getting a big competitive boost. And they’re all big clients of LS, CJ, GAN, etc. Networks don’t usually like to ruffle the feathers of big clients.

        I’m not even sure how much bills/laws like this even hurt the networks. Sure they may lose an Illinois sized share from some smaller merchants. But a lot of affiliates will simply move to and promote another program. Often one of the “big boxes”.

      • Brian Littleton

        Trust,

        It is already in your state. It is in every state, I highly suggest getting on this before the momentum begins.

        Honestly, I just don’t think you’ve been involved enough in the fight in Illinois to know what was being done and what wasn’t.

        Nothing has been secretive about our effort – we’ve enlisted everyone we can think of in Illinois by sending emails, making phone calls and utilizing every method of communication we have. If you had been in the room in Illinois it would be easy to agree with me here as the effort has been monumental.

        There is nothing with regards to the outcome that has anything to do with lack of effort, secrecy, or lack of individuals involved.

        • http://twitter.com/Trust Trust

          “It is already in your state. It is in every state, I highly suggest getting on this before the momentum begins.”

          I was just told in another post, if it was in my state, I would be seeing info when I login. I don’t see it when I login to SAS. Don’t see anything with any networks for my state. Why not?

          “Nothing has been secretive about our effort”

          You:
          “The reason this is done in private emails as opposed to open forums is that we don’t wish to share our information with those who may approve of this bill”

          What’s wrong with open forums? Affiliates can’t see private emails. I’ve seen Google groups, private emails, private forums when this is a topic that needs exposure. The more the better.

          • Brian Littleton

            Trust,

            You’re just twisting words and honestly I don’t know why.

            My point is that it is in your state even if you have not heard of a specific bill. Every state has the potential to have this happen – get involved now before someone points you to a specific bill. You don’t need to be notified by anyone – you already know. So, again, it is in your state…. if you think you can do better, go for it. This isn’t a competition. My hope is that you’ll have much more success in this area than I have in Illinois.

            Stop waiting for someone to put a notice on your network login and get cracking. Find your Senator and tell him what is happening in other states… do the pre-work that will be a monumental help should a law actually every be introduced in your state.

            Private emails are to share strategy amongst people who are involved or who are going into testify. When going into a senate testimony, you don’t tell you opposition exactly what you are going to say – that is just not smart.

            It doesn’t mean that our recruiting efforts have been private. We’ve been entirely open and public about recruiting people to the fight. It certainly doesn’t mean that we exclude anyone, we’ve asked for – and received help – from just about every corner of this industry.

          • http://twitter.com/Trust Trust

            I added some stuff to my post. Right now there’s nothing to do, since nothing is happening.

            “When going into a senate testimony, you don’t tell you opposition exactly what you are going to say – that is just not smart.”

            As far as that and I posted about that already. What did you say new, that wasn’t already said before in testimony with these other states? I watched the Colorado one live, I just watched the tape of the one in Minnesota, saw Connie testify and another lady and it’s the same stuff I’ve already heard. so the opposition already heard it as well. And again, I think we’re in the right, there’s nothing really secret to the strategy I’ve seen so far. That passing laws that hurt the businesses/people in your state isn’t exactly a good idea.

          • Brian Littleton

            Trust,

            What did we say new? A lot of things. For one, we are 100% honest with the Governor including providing revenue numbers, job projections, plans on expansion, etc… real things that we can’t really share in a public forum. This should be easy to understand for someone who values privacy as you do.

            If you really think that there is nothing to do because nothing is happening, I would strongly urge you to reconsider that. Every single state sees what happened in Illinois and heard the “spin” that they put out regarding how much tax they were “going” to collect.

            There is no such thing as “nothing is happening”.

  • http://www.facebook.com/jimkukral Jim Kukral

    I just sent an article in to Angel about this issue. Summary: This is a branding issue. Hopefully it’ll be up soon.

    • Brian Littleton

      Jim,

      I agree that the branding of the industry could be different. You and I have spoken on this in the past, assuming I have some idea what you wrote, and I agree with you.

      However – the Governor in Illinois as well as the President of the Senate and everyone that we spoke to had a very clear understanding of what we did … they knew it was advertising, they saw the examples, etc… this particular decision wasn’t without the knowledge of what was involved or what would happen.

      As they said to me, and in their press release… this was about “fairness”. They perceive Amazon specifically as doing something wrong – and they want to “right a wrong”.

      What REALLY happens seems to be of little consequence as long as they can be seen as standing up to Amazon and seen as protecting local retail.

      On this point we don’t disagree – I’d love to see a level playing field and we offered every assistance that we could in compromise, rewording of bills, everything – in the end our offer to help was ignored and they simply passed and even more damaging bill than the one in New York.

      This wasn’t branding – it was big-box retail using Main St. sympathies to gain leverage on what they perceive is their main competition.

      None of our arguments (job loss, no income generated, etc…) were really ever questioned… everyone knew what the result would be. It came down to “fairness” and putting affiliate marketers in Illinois at an extraordinary disadvantage was deemed fair.

    • Brian Littleton

      Jim – I shouldn’t have spoken before reading your article, I apologize. Your points are taken and expect an email from me.

      I don’t agree with you 100% but I get the idea of what you are saying.

  • Anonymous

    This isn’t a branding issue at all. It’s a political clout issue. If we (internet marketers) want to impact the legislatures in our state(s) or the federal gov’t, we need to organize a lobby and start making political contributions to ensure that we’re heard. Simple as that. Make all the common sense pleas that you want – until we are organized and contributing to political election campaigns in a significant and meaningful way, we won’t be heard.

    Disagree with me all you want – in concept I think it sucks, too – but its the reality of the situation. In fact, if we got in front of this issue and lobbied IL effectively, this issue would never have made it to a vote.

    • Brian Littleton

      I agree that we failed in Illinois ultimately, but consider two points.

      1. The bill was introduced, “debated” and passed in less than 48 hours with extreme pressure from one of the most powerful lobbies in the State of Illinois.

      2. Learn from our mistakes and get out in front of the issue in your state….now. Don’t wait, find the critical points and lobby now.

      • Anonymous

        Completely agreed. They did #1 because of our lack of #2. Thing is – lobbying is EXPENSIVE. Who is going to pay for that? Who is going to unite the AM community, develop messaging, take donations and ensure we’re mobilizing our $$$ properly? To this point we’ve been way too fragmented to do anything effective…

        • Brian Littleton

          I think the people in Illinois who did spend money, organized, fought, and ultimately were told that their industry doesn’t count in a discussion of fairness would disagree with you that the effort was fragmented.

          Again – if you’ve got a better idea, go out and do it. I’d be happy to share where I feel our weak points were or where our arguments weren’t as good as they need to be and my line is always open.

          • Anonymous

            By fragmented, I mean that as a business owner in this industry I don’t have a single trade association or PAC to donate to. There are dozens. I wasn’t referring to your efforts in IL, and certainly wasn’t trying to belittle or disregard them. I apologize if my comment was interpreted that way.

            Your comment about the organization of the folks in IL is exactly my point – although the battle was being fought in IL, this is an issue of national significance. We should be mobilizing our entire industry in battleground states…

  • http://www.thehotiron.com/ Mike Maddaloni – @thehotiron

    Good morning – I thought I’d share my blog post on this, if for any other reason I mentioned this blog thread in it!

    http://www.thehotiron.com/index.php/site/comments/pat_quinn_screws_entrepreneurship_in_illinois_by_signing_amazon_tax_bill/

    mp/m

  • Pingback: Pat Quinn signs crackdown on collecting Internet sales taxes for the Peoples Republic of Illinois | IT For The Not So Common Guy

  • http://www.performancemarketingassociation.com Rebecca Madigan

    I don’t have much to add to the amazing comments on this thread. I’m late commenting because of hard cross-country travel. I’m not going to share publicly where I was because I was visiting with state legislators in other states. The Mainstreet crew are following the activities of this industry and the PMA very carefully, and have tactically reacted to everything we do. We show up – they show up. Their lobbyists see us with affiliates at various state houses; they follow us around and undo all our work with their yarns. They read this website. They quote comments from this website back to legislators. We believe they infiltrated a weekly strategy call we have with public policy folks and lobbyists. They are playing dirty – on many fronts.

    This year the game changed. The money and power behind these big box retailers is much greater than we expected. Our fate was probably sealed years ago when the big box guys started getting the right politicians elected who could force this legislation through, and their guys just took office.

    We realize we lose the support of more people by keeping our tactics close. But after doing this for 3 years, and getting burned many times, we made the decision that the risk of a more publicly waged grassroots campaign was much greater than the gains.

    We ask all our grassroots advocates to join private in-state Google groups, where we share and discuss updates and tactics. Several networks post information just to affiliates in states where there are active bills. ABW has a private forum. It’s not to keep affiliates or interested activists out, it’s to keep the bill proponents out.

    Agree with comments and another post that we have a branding issue. Agree we could do a better job in the press. Agree we need more people to help. Agree the PMA site could be better updated. But we’re a small industry, the PMA is a small organization, and we decided to put most of our resources directly into the actual fights. I’m not updating our site because I’m in multiple states every week, along with amazing affiliate activists, fighting this on the ground. We wish more than anything we had more resources to keep everyone better updated.

    And now to the affiliate activists. YOU are the ones who are making a difference. We’ve beaten this back in every state since 2009, the only state to pass in 18 months. It was accomplished because legislators got to see real live business owners who would be devastated if passed. Amazing, wonderful, passionate people have gotten involved. Tim, Scott, Brian and so many other Illinois affiliate marketers put their businesses on the line and fought their hearts out. As someone said to me Monday, “If this passed and I didn’t do anything, I’d feel terrible.” Yes, that’s a very terrible feeling.

    Here’s the deal: we’re actually still winning. Yes, Illinois was a terrible blow but the Governor took so long because the Illinois affiliates made it extremely difficult for him to sign. We’re seeing a kitchen sink of tactics and misinformation being thrown at this by the proponents because they’re desperate, they don’t have logical legal arguments on their side like we do. We still have uber-successful affiliate business owners who don’t whine about unfairness but who work hard, grow their businesses and contribute to the economy.

    We can’t back down – we aren’t backing down. We’re actually going to UP the game. We can win this war!

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  • Marlon

    Illinois affiliates. Either get an address just over the state line or use a service like davincivirtual.com to set your business up in another state. Problem solved, business as usual.

    • http://twitter.com/Trust Trust

      Not quite. That solution has been offered up before and there are many problems with it. If it was that easy, many affiliates in those states would go that route.

  • IllinoisAffiliate

    I am from Illinois also. I have sold over $10k in books for Amazon some months per Quarter and got terminated from the Amazon.com program also. Even BookSlut.com got the axe who was on CNN and WTTW Chicago Tonight got terminated for the programs for living in Chicago.

    Very sad to see.

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