Will other States in America follow Illinois lead and make affiliate marketing illegal?

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Do you think that other States in America follow Illinois lead and make affiliate marketing illegal?

ShareASale Blog » Blog Archive » Governor Quinn Abolishes Affiliate Marketing in Illinois
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  • Profile picture of the author iAmNameLess
    First off, affiliate marketing is not illegal in Illinois. Amazon is the one that terminated affiliates in IL. I believe it is stupid, but amazon is the one that doesn't have a workaround for this, they might fight it but who knows.

    Secondly, Illinois isn't the first state this has happened to. I believe it will continue happening with other states until Amazon gives in, or wins in a major court battle.
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  • Profile picture of the author John Wilkes
    Governor Quinn in Illinois has signed into law HB 3659 which essentially abolishes Affiliate Marketing in Illinois.This bill becomes a law in July of 2011.
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  • Profile picture of the author John Wilkes
    Governor Quinn has spoken unequivocally that the growing industry known as Affiliate Marketing is entirely unwelcome in Illinois. The measure will requires all major online retailers not just Amazon, to collect the state's 6.25 percent sales tax on all purchases made by Illinois residents.

    The state of Illinois is about to pass a law that adds sales tax to online commerce if an affiliate in the transaction lives in Illinois.


    So, if you were an online business,would you want to muck around with all this red tape or just stop accepting sales through an affiliate?
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    • Profile picture of the author DeborahDera
      Originally Posted by John Wilkes View Post

      Governor Quinn has spoken unequivocally that the growing industry known as Affiliate Marketing is entirely unwelcome in Illinois. The measure will requires all major online retailers not just Amazon, to collect the state's 6.25 percent sales tax on all purchases made by Illinois residents.

      The state of Illinois is about to pass a law that adds sales tax to online commerce if an affiliate in the transaction lives in Illinois.


      So, if you were an online business,would you want to muck around with all this red tape or just stop accepting sales through an affiliate?
      Why would it matter? The online business (Amazon) will still have to add sales tax to the purchaser's price whether the sale is made by an affiliate or not. The PURCHASER has to pay sales tax. Technically, sellers in any state have to So why not fix your system so that your affiliates can continue to refer business to your website (as, technically, that is what Amazon affiliates are doing)?
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      • Profile picture of the author Don Schenk
        Originally Posted by DeborahDera View Post

        Why would it matter? The online business (Amazon) will still have to add sales tax to the purchaser's price whether the sale is made by an affiliate or not. The PURCHASER has to pay sales tax. Technically, sellers in any state have to So why not fix your system so that your affiliates can continue to refer business to your website (as, technically, that is what Amazon affiliates are doing)?
        What matters to small businesses (us) is the tremendous amount of paper work this will create. I've had an Ohio vendor's license for some 40 years now. Each county in the state can add sales tax to the existing Ohio sales tax.

        The result is each county has a different tax rate. A couple years ago Ohio decided vendors must collect different amounts of sales tax depending upon what county the products are shipped to.

        It's a real PITA. Now add different sales tax amounts in every state, different county sales tax amounts, and an already impossible situation becomes crazier.

        Large corporations have accounting and bookkeeping departments that can handle his. Small businesses don't.

        Amazon is large enough to be able to deal with this, they just don't want to.

        :-Don
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        • Profile picture of the author iAmNameLess
          Originally Posted by Don Schenk View Post

          What matters to small businesses (us) is the tremendous amount of paper work this will create. I've had an Ohio vendor's license for some 40 years now. Each county in the state can add sales tax to the existing Ohio sales tax.

          The result is each county has a different tax rate. A couple years ago Ohio decided vendors must collect different amounts of sales tax depending upon what county the products are shipped to.

          It's a real PITA. Now add different sales tax amounts in every state, different county sales tax amounts, and an already impossible situation becomes crazier.

          Large corporations have accounting and bookkeeping departments that can handle his. Small businesses don't.

          Amazon is large enough to be able to deal with this, they just don't want to.

          :-Don
          Really though, under the current state constitutions and law, these businesses are not obligated to pay sales tax, nor county and local taxes, when THEY AREN'T EVEN LOCATED IN THE STATE!!!! The whole thing in my opinion is ridiculous.
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          • Profile picture of the author John Wilkes
            I think some of you are getting to tied up in the tax issue without looking at the results. Firstly, big companys like Amazon are simply getting rid of affiliates in the affected states rather than comply. Affiliates have been told " move state". Commission Junction,Shareasale and all the others are watching this intently to see how they should react.

            On the ground level politicians are openly talking about getting rid of affiliates who they believe are damaging the local economies. They are not stupid, they can see that they are not going to get a big windfall increase in taxes.

            The shame is that this bill does not help "mom & pop" shops who have been convinced that affiliates are unfair competition but it does help the likes of Walmart, Target, K-Mart etc... by making their prices more competitive.
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            • Profile picture of the author iAmNameLess
              Originally Posted by John Wilkes View Post

              I think some of you are getting to tied up in the tax issue without looking at the results. Firstly, big companys like Amazon are simply getting rid of affiliates in the affected states rather than comply. Affiliates have been told " move state". Commission Junction,Shareasale and all the others are watching this intently to see how they should react.

              On the ground level politicians are openly talking about getting rid of affiliates who they believe are damaging the local economies. They are not stupid, they can see that they are not going to get a big windfall increase in taxes.

              The shame is that this bill does not help "mom & pop" shops who have been convinced that affiliates are unfair competition but it does help the likes of Walmart, Target, K-Mart etc... by making their prices more competitive.
              John, I STILL don't know what you're trying to say in every post...

              Illinois will lose money over this, not gain. Politicians are not openly talking about getting rid of affiliates. My family is in law, and politics. Fortunately I am able to learn quite a bit from them, and kind of have a head start in certain areas. The house, and senate in Illinois passed this, not to get rid of affiliates, but to get more money from the corporations. This way NOT done to HURT THE AFFILIATES! Illinois doesn't care if someone does affiliate marketing. Illinois just wants money, that is all, it comes down to money.
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            • Profile picture of the author dfs_dean
              It isn't that Illinois is against affiliates. In fact, if it weren't for the affiliates the state would have no way to attempt to force Amazon, O.co, or other online retailers to collect taxes for them. They are using the affiliates to create the nexus - claiming Amazon, et al have a physical presence in the state because of the affiliates.

              Amazon does collect sales tax for sales shipped to Kansas, Kentucky, New York, North Dakota, and Washington so they do have the accounting mechanism to handle state sales taxes. But they include the sales tax because they do have a physical presence in those states as a company. Not because of affiliates living in those states.

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      • Profile picture of the author Black Hat Cat
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        Originally Posted by DeborahDera View Post

        Why would it matter? The online business (Amazon) will still have to add sales tax to the purchaser's price whether the sale is made by an affiliate or not.
        No they don't, not unless Amazon is located in the state the customer is buying from. If they aren't, then no sales tax is collected.

        Why Clickbank and Amazon do not do this for the different states taxes I have no idea. The system is already in place and it solves the problem.
        CB already does it in the U.S. If I buy something from CB, I have to pay North Carolina sales tax because of a similar law in NC. So, what I do is pick a different state when I buy something, and voila', no sales tax. As for why Amazon doesn't do it, that's simple...because they aren't obligated to.
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  • Profile picture of the author iAmNameLess
    Well, either way, Illinois hasn't outlawed affiliate marketing. Illinois is just taxing those corporations, thats all. It isn't illegal, it isn't abolished, Amazon could have put up with it if they wanted to but they didn't. They will reconsider though, since the other states will follow suit. Either that or they will need to have a big legal fight over this.
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    • Profile picture of the author Buford Mobley
      It has happened in North Carolina. I fault both Amazon and the state of North Carolina for not being able to resolve the issue.
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  • Profile picture of the author John Wilkes
    Affiliate marketing has been described as a blight on "mom & pop" shops and in the interests of fairness, it should be legislated against to even the playing field in Illinois.


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    • Profile picture of the author iAmNameLess
      Originally Posted by John Wilkes View Post

      Affiliate marketing has been described as a blight on "mom & pop" shops and in the interests of fairness, it should be legislated against to even the playing field in Illinois.
      I'm not sure what you're trying to say in your posts... Are you still trying to say it is illegal or what? You're just posting generic lines that were in that article.

      Facts:
      Affiliate marketing is legal in illinois
      Amazon dropped illinois affiliates, not because of the legality, but because it would probably cost amazon more to keep those kinds of records than it would be to just drop illinois affiliates.
      Pat Quinn is a moron, and is just hoping to find a way to generate more revenue in our almost bankrupt state.
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      • Profile picture of the author nubchai
        Originally Posted by iAmNameLess View Post

        I'm not sure what you're trying to say in your posts... Are you still trying to say it is illegal or what? You're just posting generic lines that were in that article.

        Facts:
        Affiliate marketing is legal in illinois
        Amazon dropped illinois affiliates, not because of the legality, but because it would probably cost amazon more to keep those kinds of records than it would be to just drop illinois affiliates.
        Pat Quinn is a moron, and is just hoping to find a way to generate more revenue in our almost bankrupt state.
        That's the best summary of the situation in Illinois that I've read

        Sandy
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        • Profile picture of the author koolphoto
          Yes. I think all states will eventually enact some sort of sales tax for affiliate online sales. States like everyone else are always looking for ways to increase income.

          The internet is still a new frontier and just like every other enterprise it will eventually be government regulated and taxed.
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          • Profile picture of the author Brianne
            Originally Posted by nubchai View Post

            That's the best summary of the situation in Illinois that I've read

            Sandy
            Agreed. And this is exactly where the path will lead...

            Originally Posted by koolphoto View Post

            Yes. I think all states will eventually enact some sort of sales tax for affiliate online sales. States like everyone else are always looking for ways to increase income.

            The internet is still a new frontier and just like every other enterprise it will eventually be government regulated and taxed.
            State govt will need to make sure they have their hand in the money jar. It's inevitable.
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    • Profile picture of the author Black Hat Cat
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      Originally Posted by John Wilkes View Post

      Affiliate marketing has been described as a blight on "mom & pop" shops and in the interests of fairness, it should be legislated against to even the playing field in Illinois.


      Illinois will crush affiliate marketing if you don’t act now.
      But it HASN'T been legislated against. That's the point. Feelings aren't law. This law does not make affiliate marketing illegal in Illinois, no matter what the Governor's feelings are on the issue.

      And the governor is an idiot. The playing field is even(whatever that means) already. There is nothing stopping "mom and pop" shops from affiliate marketing themselves, or selling their own products on the internet. Sheesh, no wonder Illinois can't pay its bills. The state is run by idiots.
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  • Profile picture of the author Ouroboros
    Affiliate Marketing is no more illegal in Illinois than pot is in California. All of the states want their cut of the sales taxes because of ignorant mis-management of the fees they extort from their citizens.

    Amazon, and several other online retailers, are not willing to keep the kind of records required to pay state sales taxes to dozens of money grubbing states. Several other states have already been affected, including mine.

    Do some research on the forum for more states that have been affected.

    Steve
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  • Profile picture of the author SocialMediaOwls
    Illinois sucks
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  • Profile picture of the author Colin Palfrey
    From what I have read, it actually appears to be the citizens in their state making purchases that they want to tax.

    Honestly, that shouldn't be a surprise, as taxes are a pretty acceptable thing for a government to ask for.

    All Amazon need to do is the same thing as Clickbank do, add local taxes to the shopping cart. I know you don't see Clickbank doing this in the US, but change your country in the shopping cart to Ireland and you will see the Irish tax added on. The same applies for most European countries.

    Why Clickbank and Amazon do not do this for the different states taxes I have no idea. The system is already in place and it solves the problem.

    Cheers,
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    • Profile picture of the author Mark Gubuan
      Originally Posted by Colin Palfrey View Post

      All Amazon need to do is the same thing as Clickbank do, add local taxes to the shopping cart. I know you don't see Clickbank doing this in the US, but change your country in the shopping cart to Ireland and you will see the Irish tax added on. The same applies for most European countries.
      This seems to be a really simple solution and would work. Coming from a finance background, the government just wants its tax revenue and business is suffering because of it.
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  • Profile picture of the author DominicF
    Can't IM's in Illinois just set up a company in a different state to get around this?
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  • Profile picture of the author Kevin_Hutto
    Isn't the OP in England...?
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  • Profile picture of the author Mike Hill
    Workaround: You may live in Illinois but are your servers in that state? Register a company in another state then would you not be just fine? You could also get a Postal Box and have your mail forwarded to you.
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  • Profile picture of the author whawk57
    The sellers get taxed and so does the affiliate so its taxed twice.
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    • Profile picture of the author dfs_dean
      Guys, remember we're talking about sales tax not income tax. No double taxing. The affiliate isn't being asked to pay any sales tax on their referrals. The selling company (Amazon or whoever) doesn't pay the sales tax either. If the company has a physical presence (nexus) in the state they are to collect the sales tax from the purchaser on behalf of the state.

      Sales tax is the burden of the buyer but states establish laws so that the seller collects the sales tax at the time of the transaction and forwards it to the state. Technically, when a buyer buys something online and doesn't pay sales tax then he/she is suppose to make a payment of the sales tax to the state. This is also termed use tax.

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  • Profile picture of the author Wayne
    Affiliate marketing is not abolished in Illinois. If you live in Illinois, you could find a merchant that has an affiliate program that already has a presence in Illinois, since they would already be required to collect sales tax in Illinois then. If they don't all decide to move out of Illinois. Illinois doesn't have a really attractive business environment.
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  • Profile picture of the author Wayne
    For affiliates in Illinois, here are some merchants that you could work with:

    Merchants Maintaining Relationships w/ Illinois Affiliates - ABestWeb Affiliate Marketing Forum
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  • Profile picture of the author GarrieWilson
    Affiliates arent killing mom and pop shops. Online sales are because people skirt taxes. Quin and others are trying to get public support by blaming affiliates and using affiliates to create a nexus. Even though affiliates are advertisers that are paid for performance.

    As far as mom and pops, truth is they are failing because they can't compete on a global scale and refuse to change their business. They need to embrace the net and concentrate on added value services to make the sales.

    Adapt or die.

    -g
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    • Profile picture of the author tijja
      It is no wonder that affiliates are having a hard time fending off this type of legislation. As evidenced by this post, a HUGE number of affiliates don't even understand the concept.

      Amazon is taking this to the Supreme Court in NY so hopefully they will get a favorable judgement and set precedent for this type of law, which unfairly targets small business owners in an attempt to shake down corporations, like Amazon.

      If that does not end well then I predict more and more states will jump on this bandwagon. They darn well know they aren't going to see money from affiliate nexus laws but they figure that if enough states adopt the law... Amazon will eventually cave in. That could take many, many years. I also predict a select few states will oppose these laws openly in an attempt to make themselves "tech friendly" and get affiliates to move to those states. I am prepared to move.
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