I ask this because I am worried about Massachusetts and Maryland reconsidering an internet sales tax this year. I know that I will lose Amazon if this happens. And I am trying to figure out if I'll lose Ebay.
(California state lawmakers will begin hearings on the matter on Jan 11.)
The internet sales tax requires online companies with a physical presence in the state to collect sales taxes. Amazon considers its affiliates a physial presence and kicks them out of the program. That's why I'm not making any more Amazon hubs - among other reasons. Massachusetts and Maryland both seriously considered those taxes last year. And now a new round of legislation is making its way through the system.
I'm trying to figure out if Ebay has kicked out its affiliates from the states that have enacted these laws. Because if they have I'm not going to waste time writing more hubs.
Just to clarify a little, it has always been the case that if a company had a physical presence in a state that the state could and usually would collect sales tax.
The new twist is that many states are now changing the laws so that having affiliates in that state constitutes a physical presence by the merchant, so they have to collect sales tax if they keep the affiliates.
So if I ran a drop ship ecommerce store out of the spare bedroom in my house, but the set up an affiliate program that was successful in attracting affiliates in all 50 states, I would be considered to have a physical presence in each of them and would need to collect sales tax for each of those states and file all the attendant paperwork.
It appears that ebay has kept its affilates in NY, RI, and NC, because ebay technically doesn't sell anything.
But I can't find a specific statement from the company anywhere. If just one hubber from one of these states would say that ebay kept them, I would feel a lot safer.
Not all companies agree that an affiliate constitutes a physical presence in the state. They have been willing to keep affiliates if the affiliate agrees to only use search engine marketing. And refrains from email campaigns and PPC bidding. They consider an affiliate as advertising. The same way that a business can advertize in a New York newspaper and not be considered to have a physical presence.
So if you live in a state considering an internet tax law, it's important to know how individual merchants handle this.
Okay I think I've answered my own question. From the Ebay blog about the California pending legislation in 2009 that was vetoed by the governor.
"Many in the affiliate industry have been talking about CA Assembly Bill 178. If you’re unfamiliar with AB 178, it is a pending bill that is similar to one passed in New York that considers certain affiliate marketing publishers as sales representatives for out-of-state retailers. This would result in the out-of-state retailer being required to collect sales tax on sales to in-state customers. It is possible that this could cause out-of-state retailers to disallow affiliate marketing for publishers based in California. This bill will be heard in committee on April 13th in Sacramento, and all California-based affiliates can influence the outcome of the vote.
While it is unlikely that this bill would have any direct impact on eBay Partner Network, as members of the broader affiliate industry we wanted to make sure that we are doing our part to ensure that affiliate marketing remains an opportunity for people to build businesses and livelihoods."
Thanks for the information.
While setting up our Etsy store, I found out I do have to charge MN state tax to people who live in Minnesota. I assume I'd have to do the same on Ebay.
I am an eBay affiliate from NY and have had 0 problems so far.
Oh man, thank you so much for that!!!! You have really made my night. I am trying to protect my online business if Massachusetts or Maryland passes the internet tax law - and this helps alot. Thank you again!!!
Yea! I can write ebay hubs with blissful abandon!!!!
I am happy for you Nelle because you just had a successful month last month. It would be sad if you have to abandon it!
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