More US States About to Get the Affiliate Tax Axe

49 replies
Warriors,

Logged into my CJ account today to be greeted with a horrible message that Maryland and a couple other states and now considering the Affiliate Tax legislation.

New states seriously considering it include:
  • Maryland
  • Connecticut
Here is more info on it:

Ad Tax Update for Friday 03/12/10

If you are an affiliate in any of the above states, you might want to fight it.

I am still certain we have no say in the matter anyway...but maybe, just maybe...

At any rate, this is very alarming. As this bill gets more popular and passes, I am sure other states will follow.

Tax free internet no more
#affiliate #axe #states #tax
  • I have seen a fair amount about this (and the other states), but can someone clarify, what exactly is being 'taxed', or what exactly is 'different' from how individuals/companies are currently taxed? (None of the news articles I read really seemed to be clear on this)... Thanks!
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  • Profile picture of the author Sparhawke
    Looks like this would kill most internet marketers...
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    • Profile picture of the author Tina Golden
      This won't kill affiliate marketing. The companies offering affiliate programs will have to adapt if these types of laws get passed across the country. They're fighting it now because it's only a couple states but they're not going to drop the business model in the end - they'll need to adapt.

      Tina
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      • Profile picture of the author Marhelper
        Originally Posted by TMG Enterprises View Post

        This won't kill affiliate marketing. The companies offering affiliate programs will have to adapt if these types of laws get passed across the country. They're fighting it now because it's only a couple states but they're not going to drop the business model in the end - they'll need to adapt.

        Tina
        Exactly. The Amazons of the world have the ability to say "Goodbye" to the few states that enact this legislation but will soon have to bake it into the cost of doing business.
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    • Profile picture of the author Kevin Riley
      Originally Posted by Sparhawke View Post

      Looks like this would kill most internet marketers...
      LOL. We see this comment every time another state taxes affiliate sales. What's wrong with this reaction?

      1. Taxes only kill business if it means there is no longer any profit in doing business.

      2. It doesn't acknowledge the fact that there are not just affiliate marketers in the US. There's a whole big world out there, and there are affiliate marketers in countries that can never be touched by any US tax department.
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      • Profile picture of the author Alex Mensah
        wondering how this affects canadians...anyword on CAN taxes changing?

        Originally Posted by Kevin Riley View Post

        LOL. We see this comment every time another state taxes affiliate sales. What's wrong with this reaction?

        1. Taxes only kill business if it means there is no longer any profit in doing business.

        2. It doesn't acknowledge the fact that there are not just affiliate marketers in the US. There's a whole big world out there, and there are affiliate marketers in countries that can never be touched by any US tax department.
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        • Profile picture of the author rondo
          Originally Posted by Zeze View Post

          wondering how this affects canadians...anyword on CAN taxes changing?
          Don't you already have a national GST like Aus and the UK??
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    • Profile picture of the author bgmacaw
      Tell your politicians about this economic fact...

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  • Profile picture of the author jennypitts
    This is not the only thing Governments are doing in order to get taxes from those who do online business. It all comes down to the fact that many people, fail to voluntarily report what they make online. I recently read an article that said, among other things, that as of next year, a new law will require ALL online banks such as paypal and the likes, to provide and report all transactions. This means that those of us doing business online who fail to report earnings will have the IRS knocking at their door. So, this new measure on behalf of State Govs, does not surprise me.
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  • Profile picture of the author GarrieWilson
    Illinois is also considering it.

    Garrie
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    • Profile picture of the author Marhelper
      Originally Posted by GarrieWilson View Post

      Illinois is also considering it.

      Garrie
      Oh no, I better get my $1.89 from Amazon before they close my acct.
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  • Profile picture of the author LilBlackDress
    How did I just know you were going to say Maryland would be on there.....

    So does this mean Amazon would drop affiliates in these states?
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    • Profile picture of the author Daniel Brock
      Originally Posted by LilBlackDress View Post

      How did I just know you were going to say Maryland would be on there.....

      So does this mean Amazon would drop affiliates in these states?
      Considering what they did to NC and NY(not sure about NY yet), they will probably drop MD affiliates as well.

      The east coast seems to be the ones more open to this BS bill.

      Even if your state has shot down this bill, it doesn't matter because next year it will be up for vote again.

      I remember in MD last year this was up for vote and it got shot down, but this year it appears they made if further through.

      If not this year, then next year.

      It's really only a matter of time.

      What I am curious about, is how they expect to tax affiliates in Maryland if the affiliates can't make any money because they just got dropped from all their affiliate networks...
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      • Profile picture of the author LIndaB
        What I am curious about, is how they expect to tax affiliates in Maryland if the affiliates can't make any money because they just got dropped from all their affiliate networks...
        It's not the affiliates they necessarily are trying to tax. It's the people in Maryland who are buying from Amazon, etc., that they want to slap a sales tax on.
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  • Profile picture of the author Teresa Coppes
    The ad tax law didn't pass in Iowa on 3/2/2010 - thank goodness! So scary that some laws passed don't actually help but hinder people.

    Teresa
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    • Profile picture of the author drew3806
      Originally Posted by Teresa Coppes View Post

      The ad tax law didn't pass in Iowa on 3/2/2010 - thank goodness! So scary that some laws passed don't actually help but hinder people.

      Teresa
      Actually most laws passed hurt rather than help people:

      Consider these economic facts:

      CAFE standards, while increasing gas mileage, also increase the number of traffic deaths by creating lighter, less safe cars.

      Minimum wage laws raise the wage for those who are lucky enough to be hired, but reduce the number of actual people hired. The total amount of money spent remains the same, it just goes to less people. Those hurt worst: young people who need entry level jobs to build their resumes.

      Rent control laws are designed to allow lower income people to be able to afford housing, but result in higher income people renting more space than they actually need, reducing the amount of available housing in areas where it is enacted. Consider the amount of rent controlled space held by New York Congressman Charlie Rangel.

      Most laws are not designed to help people, they are designed under the auspices of helping people to sate politician's never ending desire for the control of other people's money and lives.

      This law is no different. The massive growth of the internet is due to its laissez faire nature and the LACK of government intervention online. Once government get's its dirty paws into internet commerce, it will screw it up just like it has the rest of the economy.
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  • Profile picture of the author cashcow
    It's not the affiliates they necessarily are trying to tax. It's the people in Maryland who are buying from Amazon, etc., that they want to slap a sales tax on.
    Exactly. It's not really about the affiliates, but if a company like Amazon has affiliates in a state then that is seen as a "physical presence" in the state and thus the company needs to collect the tax. By severing relationships with the affiliates in that state, they are freed from having to collect the tax.
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    • Profile picture of the author Daniel Brock
      Originally Posted by cashcow View Post

      Exactly. It's not really about the affiliates, but if a company like Amazon has affiliates in a state then that is seen as a "physical presence" in the state and thus the company needs to collect the tax. By severing relationships with the affiliates in that state, they are freed from having to collect the tax.
      Does that mean that all product sellers who have affiliates need to start taxing their affiliate sales?

      Even small operations who have their own in house affiliate systems?
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  • Profile picture of the author Rich Miller
    So what States are not going to consider an Internet tax at all?
    Might be a good idea to establish a different mailing address.
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    • Profile picture of the author Tsnyder
      Originally Posted by Rich Miller View Post

      So what States are not going to consider an Internet tax at all?
      Might be a good idea to establish a different mailing address.
      As the true state of the economy (not the BS you may
      be hearing about recovery) worsens I believe the answer
      to that question will be none.

      States need revenue... politicians have an insatiable
      appetite for programs that require funding.

      Tsnyder
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  • Profile picture of the author cashcow
    Does that mean that all product sellers who have affiliates need to start taxing their affiliate sales?
    Well, it would seem that way. It's only physical products though. Plus a lot of those product sellers may already have physical presences in the states so they have already been collecting the tax.

    Someone can correct me if I am wrong but I think that the big issue is that the affiliates physical business address creates a physical presence for the merchant in that state.

    If the merchant already has a warehouse or office in the state then I don't think it would make things any different for them.

    If the affiliate wants to open a business in another state not affect by the law then they can feel free to sign up again with that merchant.

    I'm not sure if you could register an LLC in an unaffected state and then have a business address there like a PO box. If you were making enough money with Amazon, I guess that would be something to look into.
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  • Profile picture of the author cashcow
    According to Wise-Geek, Alaska, Delaware, Montana, New Hampshire and Oregon don't have a sales tax currently so, I guess this wouldn't be something to worry about in those states.

    ... Until they pass a sales tax, of course....
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    • Profile picture of the author Daniel Brock
      Originally Posted by cashcow View Post

      According to Wise-Geek, Alaska, Delaware, Montana, New Hampshire and Oregon don't have a sales tax currently so, I guess this wouldn't be something to worry about in those states.

      ... Until they pass a sales tax, of course....

      Delaware is looking to be the new home for my business.

      (assuming the bill passes in MD that is)
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    • Profile picture of the author KenThompson
      Originally Posted by cashcow View Post

      According to Wise-Geek, Alaska, Delaware, Montana, New Hampshire and Oregon don't have a sales tax currently so, I guess this wouldn't be something to worry about in those states.

      ... Until they pass a sales tax, of course....
      won't happen in Delaware.

      One thing no one's mentioned, as far as I know, is that what happens when
      the cost of doing business, in general, increases.

      Who ultimately pays for the higher cost of doing business?
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      • Profile picture of the author Daniel Brock
        Originally Posted by KenThompson View Post

        won't happen in Delaware.

        One thing no one's mentioned, as far as I know, is that what happens when
        the cost of doing business, in general, increases.

        Who ultimately pays for the higher cost of doing business?
        The customer!
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  • Profile picture of the author captivereef
    How come its always the liberal tax and spend states that do this? Typical though, go after business and not cut spending. Pathetic!
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  • Profile picture of the author brownotis
    Thanks for the info. Is it possible to start an e-mail campaign against the tax?
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  • Profile picture of the author captivereef
    Maryland needs the money bad, after they raised taxes on high income earners alot of them left and it actually decreased state revenue. So what do they do to get more money because a tax decrease revenue, they instill another tax. I just do not get it!

    I am in WI, one of the top 7 taxed states in the US, i am just waiting for it to come here!
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    • Profile picture of the author KenThompson
      Originally Posted by captivereef View Post

      Maryland needs the money bad, after they raised taxes on high income earners alot of them left and it actually decreased state revenue. So what do they do to get more money because a tax decrease revenue, they instill another tax. I just do not get it!

      I am in WI, one of the top 7 taxed states in the US, i am just waiting for it to come here!
      Right. Sometimes it seems they view their actions as completely isolated
      events that will have no effect on anything. Amazon, big Amazon affiliates,
      and others affected will eventually do something in reaction. And it'll probably
      amount to passing the pain onto others.

      You're in Milwaukee? I went to Marquette (back in the day.) Great place.
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  • Profile picture of the author ChrisChoiSEO
    If anything, consumers are going to understand that they need to pay sales tax. But as a general guideline, you can still buy cheaper goods online than offline.

    The problem here is the tax + shipping that's the issue. With both combined, buying retail may actually be cheaper unless you're buying in higher quantities.
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  • Profile picture of the author LilBlackDress
    And I just bought Reviewazon.....!!!!

    So how difficult would it be to establish an address in another state. If I have a relative there maybe just use their address and pay them a small amount to be part of the business?

    After seeing how Amazon dropped all Colorado affiliates why would MD think they would make more money? Looks like everyone would lose.
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    • Profile picture of the author jan roos
      I've been building Amazon sites for a while now and its doing quite well. Would it be smart to move to a different model or just keep doing what I'm doing and expand? This whole tax thing is pretty worrying. I live in CA btw

      Cheers
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      • Profile picture of the author sudysharma
        Banned
        [DELETED]
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        • Profile picture of the author Hanz
          So I guess building a few hundred Amazon review sites isn't a good idea right about now eh?
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      • Profile picture of the author Marhelper
        Originally Posted by jan roos View Post

        I've been building Amazon sites for a while now and its doing quite well. Would it be smart to move to a different model or just keep doing what I'm doing and expand? This whole tax thing is pretty worrying. I live in CA btw

        Cheers

        Just get your U Haul truck spot reserved.
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      • Profile picture of the author KenThompson
        Originally Posted by jan roos View Post

        I've been building Amazon sites for a while now and its doing quite well. Would it be smart to move to a different model or just keep doing what I'm doing and expand? This whole tax thing is pretty worrying. I live in CA btw

        Cheers
        Jan,

        I wouldn't rush into any major changes with your existing sites. All this
        is very early developments and impossible to know what the landscape
        will look like when things have stablized.

        But I'd think it's always a good idea to expand.

        The main reason for that is to avoid having all your eggs in one basket. A
        few years back when people were killing it with adsense, and then that
        model changed overnight. People who only had adsense businesses suddenly
        had zero income. People making 30k a month in adsense suddenly went to
        zero income.

        So it's always a good idea to expand into other revenue models.
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      • Profile picture of the author Joe118
        Originally Posted by jan roos View Post

        I've been building Amazon sites for a while now and its doing quite well. Would it be smart to move to a different model or just keep doing what I'm doing and expand? This whole tax thing is pretty worrying. I live in CA btw

        Cheers
        Jan I'm in California too (assuming CA == California and not Canada(?)). Looks like this specific tax is dead for another year. Of course they'll try to get it passed again. Another year, another battle, as they say
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  • Profile picture of the author Lyn Woodring
    So they are taxing the go-between(CPA networks for instance) or are the CPAs refusing to accept affilates on behalf of their merchants.
    Take Amazon for instance are they not affilates and I believe are located in Washington State. So I take it that Washington does not have this affilate tax but were it to pass then they Amazon would need to collect sales tax and send it to each state? That would seem like a nightmare. If Amazon sells something to me here in NC and doesn't collect sales tax how is it any different if than if I bought it through an affilate that lives in NC. If the argument is that NC business's are losing revenue and the state and counties are thereby losing revenue it doesn't hold water. All a business needs do is sell through Amazon anyway. Then all a state needs do is implement a surcharge on any business in the state that sells on the internet. Sorta like the IRS assumes a tip for wait-staff.
    What does this do for or to fulfillment houses that turn digital products into physcial ones. Seems like a BS idea too me that has no logical end.
    CJ is located in California. Linkshare is in NY. Share-A-Sale is in Chicago.
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  • Profile picture of the author Rus Sells
    Can any one say;

    NEVADA! Yeee Haaa!

    I'm registering my corp there ASAP! It does not matter where I live personally it only matters where my company does business out of.

    Nither does it matter where my server is hosted or else I'd be conducting business where ever Hostgator has my server, Germany? yeah right! I'm conducting business out of country! No Fed tax for me! J/K
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    • Profile picture of the author Daniel Brock
      I just hope this bill totally backfires and causes affiliates to register in other states.

      I wonder if they have any statistics yet as to whether or not this bill gets them more money or not.
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    • Profile picture of the author Joe118
      Whats so great about NV, Rus?

      Originally Posted by Rus Sells View Post

      Can any one say;

      NEVADA! Yeee Haaa!

      I'm registering my corp there ASAP! It does not matter where I live personally it only matters where my company does business out of.

      Nither does it matter where my server is hosted or else I'd be conducting business where ever Hostgator has my server, Germany? yeah right! I'm conducting business out of country! No Fed tax for me! J/K
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      • Profile picture of the author Rus Sells
        I just like Nevada! YeeHaa!

        Actually Nevada does not have a personal income tax. So I believe if your an affiliate that is not operating as a business entity your good to go in Nevada!

        Check with a attorney though.

        Originally Posted by Joe118 View Post

        Whats so great about NV, Rus?
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  • Profile picture of the author Scott Ames
    I can see a new product "How to Offshore your Affiliate Company and Pay Zero Tax "

    What are the laws in Canada like for tax?
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  • Profile picture of the author askloz
    I can't wait til I get my market place, similar to clickbank up and running, mine will be hosted offshore, so no tax there for the affiliates...

    btw, how comes paydotcom hasn't been hit yet? Is Mikes Biz in a state that doesn't have this tax law imposed yet? or is it just a matter of time before they put a boot up Mikes backside?
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  • Profile picture of the author Online Bliss
    Let me tell you how it will be
    there's one for you 19 for me
    'cause I'm the Tax Man
    yeah the Tax Man
    and you're working for no one but me.
    "George Harrison"
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    • Profile picture of the author askloz
      LOL, "George Harrison" can speak for himself

      Originally Posted by Online Bliss View Post

      Let me tell you how it will be
      there's one for you 19 for me
      'cause I'm the Tax Man
      yeah the Tax Man
      and you're working for no one but me.
      "George Harrison"
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  • Profile picture of the author Marakatapolis
    My state is already incredibly anti-business (Washington State), so I hope they don't bring more of this crap.
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  • Profile picture of the author Online Bliss
    My state is already incredibly anti-business (Washington State), so I hope they don't bring more of this crap
    Oregon is one of the "I think" only 2 states without a Sales Tax.
    Come on down Markatopolis.
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    • Profile picture of the author Jeremy Morgan
      Originally Posted by Online Bliss View Post

      Oregon is one of the "I think" only 2 states without a Sales Tax.
      Come on down Markatopolis.
      Yeah but they make up for it with income tax and higher business taxes. Plus we just passed 66 and 67, waiting to see how that affects small businesses.
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