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What is the Affiliate Nexus Tax? (The Internet Tax/Amazon Associates Tax)

Updated on December 21, 2011
Affiliate Nexus Tax (The Internet Tax)
Affiliate Nexus Tax (The Internet Tax)

There is a relatively new tax that is aimed at affiliate marketers.

The new tax has been called the Amazon tax because members of the Amazon Associates program (Amazon's Affiliate program) were so negatively impacted - to the point where Amazon simply dropped its affiliates in the affected states.

Some people call it the affiliate tax, or the Internet tax, but it is commonly accepted as the Affiliate Nexus Tax.

Due to a bad economy, legislators are looking for any way to make a buck, so they aimed their sites on the virtually tax untapped world of affiliates who make money on the Internet.

If you make money online as an affiliate marketer, or if you're even thinking about making money online, it is a good idea for you to understand this e-commerce tax.

So, OK...What is the Affiliate Nexus Tax?

So basically, these bills (proposed or passed) are based on the idea that a specific merchant's affiliates are actually members of the merchant's sales force (the first law).

State legislators assert that if a merchant, such as Amazon, has affiliates in their state, the merchant is actually operating a business in their state.

They use the flawed analogy to tell the merchants that since they are viewed as operating a business within their jurisdiction, the state has a right to tax them as if they were any other business in that state.

The merchant then turns around and says "We don't want to pay that outrageous tax," so they then turn around and drop their affiliates in the states where the bill has become law.

That is exactly what happened with Amazon, and thousands of people had their financial security pulled right out from underneath them.

People were making a few bucks a month to a few hundred thousdand dollars a year with the Amazon Associates program, and they were dropped instantaneously.

As you can see, this tax was devastating to some people.

The bill has been passed in a few states already (NY, NC, RI) - CA recently shot down the bill.

How a Bill Becomes Law

What You Can Do About the Affiliate Nexus Tax

First of all, for your financial stability, you need to diversify your online passive income stream.

Make sure you are not an affiliate marketer for only one merchant. Also, start thinking about creating your own product.

You should know that not all merchants have dropped their affiliates in the affected states, but hundreds have.

The next thing you can do is fight back - get the contact information on your local representative and let them know how you feel about the affiliate nexus tax.

Finally, you should keep abreast of what is going on with the Affiliate Nexus Tax by visiting the Performance Marketing Association web site every once in a while.

Always Remember and Don't Ever Forget

The state and federal government is trying desperately to get their hands on the funds of people who make money on the Internet.

They have been trying for years, and they have gained decent mileage with this new tax.

Big Brother is watching and they are constantly thinking of ways to get at your money - you've got to stay one step ahead of them in order to survive.


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    • justmesuzanne profile image

      justmesuzanne 6 years ago from Texas

      They are already getting their hands on the money of people who earn money online. We are required to pay outrageously high taxes as self-employed independent contractors.