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Is there any legal workaround to the Nexus Law?

by incognito19
14 replies
Hi, I live and do business from AZ right now and I am trying to prepare in case the Amazon Nexus Law goes into effect in this once "business friendly" piece of land. I research and find feasible to incorporate s-corp in Delaware. But my problem, even after getting a business and mailing address in DE, and opening a checking account in DE, and maybe even getting a license to do business in DE, is that me, as an employer living in AZ will still have a nexus of doing business with AZ. I will be seeing a lawyer soon about this, but in the meantime did anyone found a good solution to this issue? is there a legal way to be a sole propietator in a state but do business in another? Am I missing something? Thanks in advance for your help (quick note: I am not against paying my fare chunk of taxes, I just want to keep doing business without moving out of AZ).
#law #legal #nexus #workaround
  • Profile picture of the author Amy Carczak
    Check out Wyoming for incorporation as it offers a lot of advantages for you.
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    • Profile picture of the author incognito19
      I did during my research, but I think regardless of where I incorporate I am still doing business from AZ as the nexus is created when I, as an employee, conduct business tasks (create landing pages for example) in AZ. The way I read the law, is that the nexus could be created based on where the employer doing business lives and not only where was the business incorporated.
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      • Profile picture of the author JohnMcCabe
        Originally Posted by incognito19 View Post

        I did during my research, but I think regardless of where I incorporate I am still doing business from AZ as the nexus is created when I, as an employee, conduct business tasks (create landing pages for example) in AZ. The way I read the law, is that the nexus could be created based on where the employer doing business lives and not only where was the business incorporated.
        Sounds like it's time to bite the bullet and hire some real legal expertise in the area. Your odds of getting an accurate answer on a public forum are slim, and even if you do, you'll have to separate them from the chaff.
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        • Profile picture of the author bretski
          I agree with John. My solution to the problem, since I live in NC, was to forget about Amazon and concentrate my efforts elsewhere. If you have a bunch of sites that promote or depend upon revenue from Amazon sales I'd say "flip 'em"... but that's just me.
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  • Profile picture of the author blueseagullmarketing
    I would recommend speaking to a lawyer. It is usually against the law for a person to give legal advice without the proper credentials (well in the state of Missouri at least).
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    • Profile picture of the author incognito19
      Yes, I completely agree with John and I do have an appointment setup with a lawyer specialized in Internet Marketing.

      @bretski: I think in AZ is not only physical but also digital goods that will be taxed. So goodbye Amazon and\or Clickbank. Offline here I go!!!

      My point with the question was that I seen in other post the incorporation in another state as a solution, but I don't see how. Thanks for the responses.
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      • Profile picture of the author Paul Fernandez
        You will typically have to register as a Foreign Entity. This simply means you are an out of state corporation operating in your state. It requires a little extra work but it's perfectly legal and done all the time. I live in NC and have one of my corps registered in Delaware.

        All of my Amazon affiliate dealings are done through this corp. and I have no problems.

        But of course, as everyone has mentioned, have your attorney take care of everything for you.
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        • Profile picture of the author seasoned
          Originally Posted by Paul Fernandez View Post

          You will typically have to register as a Foreign Entity. This simply means you are an out of state corporation operating in your state. It requires a little extra work but it's perfectly legal and done all the time. I live in NC and have one of my corps registered in Delaware.

          All of my Amazon affiliate dealings are done through this corp. and I have no problems.

          But of course, as everyone has mentioned, have your attorney take care of everything for you.
          Yeah, you NEVER have problems until you have problems. The question is it RECOGNIZED officially as a way around this.

          And if you register as a foreign corporation DOESN'T that mean you will have to pay local taxes as well and thus have a LOCAL presence?

          That said, when I had a nevada corporation, california was OK with it, as long as I did no business in LA requiring any california permits. California seemed to have NO problems with the nevada corporation, but insisted I register as a foreign corporation IF I wanted a sales tax and use permit. You know, ironically I was eventually given a nevada sales/use tax permit, by mistake. I probably should have tried to start that part of my business up again. 8-(

          Steve
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          • Profile picture of the author incognito19
            Thanks for your answer Paul and everybody else for their help.

            @seasoned: That is exactly my point. It seems that you can set a corporate anywhere you like but breaking the nexus (even when u want to pay your taxes to the state where u live) seems impossible (at least in AZ)
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    • Profile picture of the author seasoned
      Originally Posted by blueseagullmarketing View Post

      I would recommend speaking to a lawyer. It is usually against the law for a person to give legal advice without the proper credentials (well in the state of Missouri at least).
      Actually, I think it is against the law to say you are, if you aren't, or act, or receive money, as counsel for another. Then again, there are even laws against LAWYERS doing that, unless they are admitted in the state.

      Steve
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  • Profile picture of the author ManieE
    This is so confusing!
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  • Profile picture of the author ScottR
    Not a lawyer here, this is not legal advice, etc... (God I hate that we feel compelled to give that disclaimer!) From what I can discern from most of the proposed or enacted state affiliate nexus laws, it seems the burden of paying the sales tax would fall on Amazon and other out of state corporations doing the selling. States are trying to claim that in-state affiliates create nexus for the out of state merchants (not for us as affiliates). Therefore, if you were to sign up for an account with any out of state address, it would SEEM you would be more in risk of losing your Amazon account than with owing sales taxes/fines to your state. And I am not sure Amazon would care or have an efficient way of uncovering residence addresses of affiliates with out of state DBA's. Of course, if you are already losing your current Amazon account, this might not seem like too much of a risk. Clearly you'd have to check this with a lawyer.

    I would also think there MUST be creative ways to use NV or DE LLCs to avoid these silly (and likely unconstitutional) new laws. This is were a good lawyer could really come in handy. After all, GE ended up getting a net refund last year thanks to such "creative" accounting and corporate structures. Surely we can find ways to keep ignorant (and often corrupt) legislators from destroying our hard-earned businesses.

    Many proposed affiliate nexus laws cover only "performance-driven" ads (apparently meaning ads getting affiliate commissions vs CPV or flat rate ads). Given this, here is one highly theoretical setup: you create a Delaware LLC that you, as an individual, "contract with" to place the LLC's Amazon code on your personal sites. Your LLC (as an out of state "individual") could then pay you, the individual website owner, a flat rate for that privilege and collect the "performance-driven" money itself, passing on the difference to you as a stockholder. Again, this would need serious legal counsel to verify and set up.

    Or perhaps the solution could be as simple as creating your sites, then selling them to your Delaware (or NV) LLC once they are getting traffic. You could have out of state independent contractors (in other words, outsourced workers) maintain the sites, build content, and do SEO, all paid by the LLC. As long as you have no significant in-state presence, you could possible avoid being classified as a "foreign corporation" in need of registration (and possible taxation) in your home state.

    Of course, the catch is that any of this needs to be set up by a lawyer, which can be pricey. But here is one idea: go to a local chamber of commerce mixer, find a business lawyer, feel him out to see if he seems smart enough to work with, then offer to barter some link building, blog setup, social media work, etc in exchange for them setting this up for you. I can tell you from experience, there are many good lawyers out there that are hurting for business right now, so you could swing a deal for yourself and help drive them more traffic and clients at the same time.

    So those are some of my initial thoughts on this messy situation. I am fairly confident there will be legal ways to keep our heavily-lobbied and woefully out-of-touch legislators from killing our businesses (and ultimately losing state income tax money while seeing little or no increase in sales tax revenue). It might just take a little thinking on our part.
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  • Profile picture of the author paintbrush4u
    I am a little lost here....

    My understanding of Nexus is no where close to what this thread is referring to.... Gotto brush up my legalese...
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  • Profile picture of the author logieBear
    Thought I would bump this thread instead of creating a new one. Living in arkansas and just got booted out of a big commission junction affiliate. Feels bad man, looking for a way to legally beat the system.
    Any help is appreicated, looking at skinlinks but man taking %25 ? Better than getting 0% of sales but wish I could find something better. Any thoughts guys?
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