The vote wasn't even close 35 to 18. While Amazon has not yet cut off affiliates, about one dozen merchants have.
If you live in Connecticut this is the time to prepare to lose Amazon and a bunch of other affiliate programs. There are options.
Here's a Link that will Help. http://affiliateadvocacy.com/
Oli, the trigger is where you are a resident - not where your business is located. You can't legally get around these laws by incorporating in another state or renting a post office box.
It is you that creates the physical presence that triggers the sales tax requirement.
In addition to Connecticut - both Maryland and Florida are considered an imminent risk.
That's why I no longer build Amazon hubs. They often axe affiliate prior to the actual passage of the bill. Ebay lets you stay in the program because it's a different business model.
When's the pay a tax just to breathe tax coming out, followed by the exhaling tax.
If I incorporate a British business with a family member as an owner and then employ myself as a service contractor I should be fine.
No you are not okay. It is your physical presence in the state which causes the nexus which triggers the state sales tax. They mention affiliates explicitly. If any part of your company is physically in the state you trigger the tax requirement.
Believe me I've had friends have their businesses destroyed and lose nearly 100% of their income. Their only choice was to relocate themselves to another state - which they did. This was after the advice of lawyers and accountants.
But so far there has been no mention of Texas as a state at risk. I live next door to both Rhode Island and Connecticut - so I am preparing.
She's right Oli. The location where you physically transmit your affiliate referrals online will determine whether you are included or not. There is no work around other than finding affiliate programs that have a physical presence in the state where you live and already collect sales tax from their online affiliates.
My state of Illinois is on the chopping block with Amazon but I'll continue to promote them until its no longer an option. In the mean time I've been promoting the heck out of ebay here and on my other sites.
I haven't heard anything about Texas going after the online sales tax but I'm sure all states are looking into it as a means to recover some loss of revenue especially in this down economy.
As a tax accountant I can verify that Nelle is right about nexus. Your physical presence in the state in question is all that is needed to trigger the sales tax collection requirement. It sucks. I know. But no one ever said taxes would be fun.
I think Ebay did the smart thing and changed their affiliate model. Amazon's affiliate program will fail as more states succumb to the thrill of easy sales tax money from online retailers. Until then, Ebay seems to have a significant advantage over Amazon.
Or you can starting educating your state reps about the fact that these laws just don't work.
Because most of the thousands of online compaines without a physical presence in the state just stop working in affiliates in that state. (Amazon is not the only company to axe affiliates.) So the state does not see any additional revenue from them.
Companies with a physical presence in the state sometimes discontinue their affiliate programs. And people like my friends just move to another state.
So the states see no additional revenue from most of the companies and they lose the substantial income taxes that successful affiliates were paying.
Go to the link in my first post, if you want to learn how to educate your state reps. There are rumblings that Rhode Island is considering repealing their tax.
But you are not a physical employee of the company, you are merely a contracted writer, I have a few friends who earna lot in affiliate marketting, this is how they have been able to get around it. They get paid a monthly wage on a contract which is renewed monthly.
It means the money comes through a month later but there is no employee to be a physical asset in one of the affected states.
Of course you do need someone trustworthy to own the business in another state.
To be honest though, if more and more states start to bring in laws such as this, it is only a matter of time before things change to encompass them.
Just to clarify, the work around is by being a consultant writer, not anything to do with internet affiliate sales, you are contracted by an affiliate company. It is even better if you set yourself up as another company trading solely in writing services.
If your writing results in a sale of an affiliate product in a state that requires the collection of an online sales tax then the affiliated company is required to collect that sales tax. Amazon and other companies with affiliate programs are refusing to collect that sales tax for those states and instead will drop the affiliate membership of any member residing in those states.
So, its not what you do or what you call yourself, its the result of your work and where that work was originally transmitted onto the Internet that will compel the affiliate networks to drop you from their ranks.
I personally write tens of thousands of words of content which ends up on affiliate wesites every week for a varying number of companies, I will still be doing this in austin.
If the new taxe passes in austin how would my work be differentiated between companies which use Amazon in states where it is active and companies which dont?
The new tax does not cover general writers who write content for companies outside of the state, all that is required is for you to provide consultancy to these companies, which it jsut so happens that a family member owns.
You are not getting any money from affiliate sales, you are paid for your writing.
Thisisoli If you are in the state, YOU ARE the nexus, it doesn't matter what role you play for that company. Now you understand the frustration of affiliates in those states.
Believe me I have friends who have hired major league tax lawyers and CPA to try and find a LEGAL way around it. And there is none.
You don't understand how the US is organized and how powerful states are. We are called the United States of America for a reason. There is absolutely no guarantee that any thing will happen to make this better for affiliates. Welcome to the most brutally efficient economic machine the world has ever known.
If you aren't an affiliate you're fine. My business is affiliate marketing. But what happens as the number of affiliates shrink?
Actually New Hampshire to our north doesn't have a sales tax - so we're looking into buying a home there and making that our residence, if things go badly here.
If i get olis train of thought ...base business in state or country that does not have tax or limitations, use friend, family or trusted partner as THE AFFILIATE, have AFFILIATE hire yourself as a content writer/consultant for affiliate business.
Its still the internet, who has legal access to the originating IP of published content? Who knows who pushed the publish button?
(referring to original transmission statement below)
I really dont see how this isnt viable/ I would def value the opinions of everyones experiences especially the accountants.
I was under the impression companies based their physical addresses in advantageous tax regions as the norm?
It is the norm for federal taxes Josh but we're talking about state sales tax collection and these laws that are popping up are a means to subjugate companies that are selling products online and bypassing interstate commerce laws of taxation.
Oli, if all you are doing is writing content and being paid for your content to be posted on another person's site then you are safe from worry. If you are writing your own content which includes affiliate sales copy then you need to be concerned. It's your own personal content that leads to an online sale to a company which you are an affiliate and would receive an affiliate commission for that sale that will affect you.
Exactly thats why you set up all the content and affiliate programs with a trusted third party as a company and then bill yourself through the new company in a different state.
All you need is an address and a person you can list as the owner, even if they don't receive wages. YOu simply pay yourself the affiliate earning for the month before as your fee.
I know a few people who do this legally and have had no problems with their state government because of it, I can't say I know all the details because I haven't had to do it myself, I am simply telling you how other people are getting around it.
I'm wondering what would happen in Pennsylvania with Amazon. Would they actually terminate their affiliates if this passed? Amazon has a wholly owned subsidiary that has physical warehouse presence in the state but since it's not Amazon that owns it, they don't collect the sales tax. If that changed would Amazon cut the affiliates and shut down their subsidiary? Or bite the bullet and keep both.
I have not been following this too closely as I don't suspect TN will have a problem any time soon. The most recent bid for a state income tax a couple of years ago fell flat, so I suspect that it will be awhile before I need to worry.
Texas being a fairly conservative state should also be safe for awhile, but as I said I really don't keep up with this around the country.
There is a very nice map that Linkshare is providing that they claim will be periodically updated as legislation on internet taxation progresses.
EDIT: I just noticed the link Nelle provided also has a map. Not sure why they list TN as "high risk," especially when the state resources link for TN seems to be password protected for some reason. I will have to dig in further...
I have to admit though my own personal view is that all internet marketers affected by these laws should send a letter to their local government representative saying.
"Way to boost the economy retards, I am just one more person you have put out of business."
A lot of us are writing them and trying to make them aware of how it is affecting our way of life. But their concern is for the "many" not the few and believe that it's in the State's best interest to recover lost sales tax revenue. They see this as the responsibility of the Affiliated company and not so much the affiliates themselves. Either way, we're screwed when it happens and in my state of Illinois it's coming soon. I'm certain!
Richard, show them the list of companies that stop working with affiliates, so they understand that they don't get any additional revenue in the end. And that they lose a lot of affiliate income tax revenue.
I sat down with my state rep and explained how this works. Honestly he had no idea that so many companies in addition to Amazon had an affiliate progam, and they just terminate affiliates. He didn't think this would happen. He also didn't know how much an affiliate could make.
That being said - crank up your ebay and adsense. For now, I think that's the best protection.
That's the problem, the Reps get dollar signs in their heads just thinking about how to spend that lost revenue. It's especially true here in Chicago where we are taxed at the Federal, State, County, and multiple City levels.
Here is something to do:
http://performancemarketingassociation. … eform.html
Go register there and they make it easy to keep up on the legislation and to contact your legislators. The more internet marketers (full time and part time) that get involved the better chance we have at getting the issue resolved equitably.
Personally, I think there is a better way than by collecting sales taxes on individual sales. It would be better to establish a Fee system on those companies to do business in the state. If they don't pay the fee then their main website or any links pointing to their website get blocked by the ISP's. It's the Companies themselves that are avoiding the tax IMO because the sales tax on online transactions takes away a competitive edge on pricing.
There is always the option of using Squidoo if you can't be a direct Amazon affiliate.
On Hubpages, you use your own Amazon ID, and hubpages displays it 60% of the time (and their own ID 40% of the time.
On squidoo, it's Squidoo who is the affiliate, and they collect the earnings and then split it 50/50 with you. So you should be able to earn using the Squidoo amazon modules even though Amazon has banned your state, as Amazon's relationship is with Squidoo not you.
Somewhere along the southern slopes of Hades, where spammers go when they die.
Come now, don't be mean. There's a lot more spam on Hubpages these days, because of all the autogenerated bots. Spammers seem to have exited Squidoo since the crackdown last summer.
Yeah I heard that Squidoo got Google slapped again, long live Hubpages!
Where did you hear that? I've been producing Squidoo lenses and they are all ranked on Google - so not sure where the rumour of a "slap" has come from (unless it dates back to last year).
I think it was around September/October last year, a lot of people making money on Squidoo suddenly found themselves in dire straights because they lost all their Google rankings. A quick Google should pull up some info because there we forums full of people complaining about it for ages!
They are based in New York State. But because they are so huge and associated with Seth Godin, I doubt Amazon would strike them off as an affiliate.
Squidoo are also very flexible about you using other affiliates - Commission Junction etc, allow you to paste html and to link out 9 times to a single site.
I used to work in politics and dealt with a lot of state representatives. Please take my advice into consideration:
For those of you contacting state legislators - don't just contact your district's rep. Contact as many as you can. Some districts have reps that really can't do much of anything (freshman status, not taken seriously, they don't give a crap, etc.) Don't just contact one - contact as MANY as possible. Stop by the majority's and minority's house offices and make an appointment in person - it shows you're serious.
Ask your district's rep to help you schedule a hearing before the applicable committee in your state. Get other affiliates in your state to testify at the hearing. Present the evidence on those great websites you've listed here; let them know what is happening elsewhere.
Again - I can't word it any stronger - don't just contact one legislator!!!
Trust me on this!
Lastly, I should add if it is truly worth it to you financially- hire a lobbyist. Find a good legislative law firm. They can help you devise a good strategy to talk to your legislators.
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