News Brief: Affiliate Nexus Tax Reinstated in California and Pennsylvania
The PMA announced this morning that the Affiliate Nexus Tax will be reinstated in Pennsylvania as of September 1, 2012, and in California as of September 15, 2012. Rebecca Madigan, President of the PMA wrote in a post about Pennsylvania’s tax stating that the PMA is working with Pennsylvania to clarify the ambiguous and vague statute. The PMA confirmed that they’re pursuing clarification regarding what ad types contribute to nexus.
Madigan also wrote about California’s nexus tax:
The state had suspended the law to give us time for passage of federal legislation (which has not yet happened).
The PMA has been working closely with the Board of Equalization, the agency that oversees sales and use tax collection. The BOE has developed a work-around process that will allow affiliate relationships to remain in place, under certain circumstances. Modeled after similar regulations developed in New York, advertisers can still work with California publishers and not have nexus established, if their publishers agree to avoid certain marketing activities that are deemed â€˜solicitationâ€™ or directly targeting California consumers. This means publishers are not allowed to send emails to Californians, distribute fliers, or verbally inform people to visit advertisersâ€™ sites.
The regulation can be found on the BOE website.
The regulation goes into effect August 26, 2012. However, instructions on compliance have not yet been released. Per the regulation, advertisers must include specific instructions in their advertiser agreements that explicitly prohibit these marketing practices. And publishers must annually commit via affidavit to avoid these practices.
These moves on the part ofÂ PennsylvaniaÂ and California seem to confirm that they have little confidence that national sales and use tax reform will happen any time soon. Between an election and a possible lame duck session to tackle a “fiscal cliff,” this reform appears to be firmly on the back burner for the foreseeable future, an unfortunate turn of events for frustrated affiliates.