Go Amazon Go!

Well, June 1st we will know what the outcome of this is and during affiliate summit I am sure someone will round table this so we can all discuss..

Appreciate your comments!

Thanks for the post, I really don't know if we can stop "Big Brother" or not, seems when they see a way to grab money with no effort on their part they will get it somehow.

I am sure it is something we will have to face in the future, whether it's the near future or futher down the road.

Thanks Again,

Pugsley

While the states are losing tax revenues due to remote sales (catalog and Internet), the issue is a federal one when there is no nexus. Web presence does not constitute nexus just as catalog orders over the phone do not.

Well you bring up an excellent point and we could have an issue with the entirety of CPA monetization type for merchants concerning sales of products and sales tax. Now what happens however if the model changes to a CPA based on a percentage of the AOV or if it is CPC, or CPM based? How can tax regulation come to pass on these monetization models? And who is expected to collect and report the sales tax on the item? The merchant or the affiliate.

There are so many issues surrounding this, I am also wondering how the sales tax is instituted to be collected to affiliates how the CPA monetization model might have to change to compensate this loss to affiliates?

If sales tax becomes enforced we have other regulatory bodies that will come into our world to enforce them..

The issue of "nexus" or "physical presence" will be of interest because if a company has it enough to dictate that they collect sales tax, that means that they will have to also pay income tax to that state (assuming of course that the state has an income tax for corporations, etc…).

Collecting sales tax is one thing, but paying income tax will raise some eyebrows for corporations who really don't have a presence there. Slippery slope, etc…

There are thousands of implications. If an affiliate is a "nexus"… than what about a lawyer, an accountant, etc…etc… The federal government has already decided on all of these things (no) in my opinion …

Anyhow, we will prepare for it of course, but it certainly is an extremely dissapointing move from our governments.

I have been reading up on the 1992 U.S. Supreme Court ruling in Quill v. North Dakota which states that only businesses with a physical presence in a state are required to collect sales taxes on purchases shipped there.

Yes the debate on “physical presence” will become a primary focus I would think, and we all know how savvy affiliate marketers are concerning knowing how to cloak this “physical presence” which I am sure might also become an issue in the future if this all comes to pass. Each state apparently has different opinions on “physical presence” so this will get interesting.

So far you are the only network I have seen respond to how to manage this issue should it come to pass with your statement below..I am hope other networks are preparing for this issue should it become a viable one.

"From the looks of it, merchants will need to know if they have ANY affiliates in the state of NY who produce more than $10,000 in annual sales…. if they have even 1 affiliate who meets that criteria, they will need to collect sales tax on all visitors from NY."

Brian, do you see affiliate managers and OPM's needing to overly scrutinize applications to determine location of the affiliate website and their visitors? I see so many issues with differentiating New York affiliates, now imagine if this goes to multiple states, now we are talking managing lists of affiliates per state and clustering them as such..

This could get wicked real fast..We are preparing strategies for managing this situation here at PMG should this come to pass.

I appreciate your comments!..

My personal interpretation of this is that "affiliates" do not meet the criteria met in the Quill decision and that the federal court has already decided states are prohibited from collecting sales taxes specifically due to the heavy burden this would place on interstate commerce and those merchants engaged in it.

But…my opinion matters little here

In the meantime, we will start looking up ways to report to our merchants the information that will be necessary to carry out this (ridiculous) requirement. From the looks of it, merchants will need to know if they have ANY affiliates in the state of NY who produce more than $10,000 in annual sales…. if they have even 1 affiliate who meets that criteria, they will need to collect sales tax on all visitors from NY.

That is how I read it anyhow at first glance… we'll have to do a more thourough review obviously.

Maybe this will again become a federal issue by the time elections roll around… who knows.