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Correct Me If I'm Wrong Re: Affiliate Marketing

by TiffanyLambert
15 replies
Hi Warriors!

I had mentioned something about how people should set up their own affiliate program for a specific business model and someone on my list sent me this:

"Just a reminder that us folks in the great state of Illinois cannot partake of the wonderful world of affiliate marketing. As you know Amazon does no business at all in Illinois since our Guv. Pat Quinn virtually shut down affiliate selling."

I thought that was just Amazon. Does it affect an individual setting up an affiliate program online for their info products? They're digital downloads.

Thanks ahead of time!
tiff
#affiliate #correct #marketing #wrong
  • Profile picture of the author cashcow
    You are not wrong, it is just Amazon and probably some other online merchants in the same situation.

    It sounds like they misunderstood what you meant since you are talking about an affiliate program for people to get affiliates not for them to be affiliates, right?

    Lee
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    Gone Fishing
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  • Profile picture of the author affilcrazy
    Hey Tiff,

    Not my part of the world, but I did read this article when the furore started -

    ShareASale Blog » Blog Archive » Governor Quinn Abolishes Affiliate Marketing in Illinois

    HTH

    Cheers
    Partha
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    "There is no fixed teaching. All I can provide is an appropriate medicine for a particular ailment" - Bruce Lee, Tao of Jeet Kune Do (on Zen)
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    • Profile picture of the author Jill Carpenter
      I had mentioned something about how people should set up their own affiliate program for a specific business model
      Just need to clarify. You were suggesting they create their own products and from that add an affiliate program so others can promote for them?

      It appears (I could be wrong) that you are not allowed to be an affiliate in Illinois. But I don't see why you wouldn't be allowed to have a business and allow affiliates in other states to promote for you.

      Then you can sell your products (like any mom and pop) and you have an out of state sales force selling.

      Does that make sense?
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  • Profile picture of the author TiffanyLambert
    Thanks for your replies. Yes, I was talking about the person setting up her own content store, then letting affiliates from all over the world promote for her. So she could still do that, awesome!

    I thought, from the way she talked, that maybe Illinois had some cantankerous rule about not even having an affiliate program.

    You rock Warriors!
    tiff
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    • Profile picture of the author dsouravs
      Bad rule by govrnr...
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  • Profile picture of the author MikeTucker
    Yeah, Gov. Quinn must be friends with Gov. Rick Perry... but it is not only them, it seems there are quite a few that against Internet Marketing these days. (At least Rick Perry is running for President... maybe we can get rid of him like we did Bush? Give the problem to everyone else instead of ourselves, LOL?)


    It is an interesting problem, dealing with governments that try to hold back the Internet and Internet Marketers... Ultimately they cannot win, but they do have power and they are desperate for money right now, in the short term.


    Anyway, from what I've read, it seems to me that although your client cannot be an affiliate or have any affiliates from IL, they should be able to have affiliates from other states working for them.
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  • Profile picture of the author TiffanyLambert
    Gov Perry was against the law that forced Amazon out - he's PRO business and affiliates.

    The comptroller made that decision. Here's a news blurb about it:

    "At issue is whether a company with a physical presence in the state is compelled to pay sales taxes to residents of the state. Perry's argument is that since Amazon has no storefront the physical presence rule shouldn't apply, and from his comments it sounds as though he may push the Legislature to make some move that would allow the company to stay and not pay taxes."

    Tiff
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  • Profile picture of the author The Magician
    Does it affect an individual setting up an affiliate program online for their info products?
    No. You can still create an affiliate program, or market products as an affiliate. Amazon just took their ball and went home, that's all.
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  • Profile picture of the author clarktr2
    I still think this is just for Amazon affiliates. Does anyone have a link that shows that other affiliate programs are not allowed in Illinois?
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    • Profile picture of the author fitz10
      Originally Posted by clarktr2 View Post

      I still think this is just for Amazon affiliates. Does anyone have a link that shows that other affiliate programs are not allowed in Illinois?
      Look above, the link to the Share-a-Sale blog covers the law.
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  • Profile picture of the author nubchai
    Gov Quinn (grrr) in Illinois passed a bill saying Amazon had to report Illinois sales tax for Illinois affiliates. I don't think Amazon had to collect the sales tax but Illinois wanted the amount documented so that the affiliates would then pay the taxes due. That was my understanding. Then of course Amazon pulled out of Illinois so there were no more Amazon affiliates.

    /* Begin Rant It was another example of bad thinking on the part of Quinn and other legislators. Illinois is turning into an anti business state and small business are starting to move to Indiana and Wisconsin. /* End Rant
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    • Profile picture of the author DebiJ
      Tiffany,

      I was born and raised in IL and am constantly amazed and ashamed by the way they continually keep hurting small and home-based businesses there. One of my best friends & several other very good friends work their butts off building their online presence in order to stay home and support their families, yet the state continues to set up road blocks!

      Certainly I'm no expert on affiliate law but it seems to me that IL has zero control over whether people in other states have the ability to market for me!

      Debi
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      • Profile picture of the author gananathan
        Would setting up a LLC in another state help the situation? LLC is its own legal entity and hence should help mitigate this problem, right?

        So what happens in this case? An affiliate company in, say Delaware, with employees in IL, would it be subject to the same tax laws or not? Since the company itself is in another state, but with employees in IL, would it satisfy the presence condition?

        I am not sure about this, but just goes to show that we need some kind of federal solution to this to avoid these situations.

        All the states with this law achieved is to get the affiliates in their states terminated, thereby resulting in less income taxes. Amazon and others still continue to make sales to residents in these states, either directly or through affiliates from other states.

        What the govt should realize is that this is a new medium of advertising and is complex than what it seems at the surface. Hope they realize this sooner than later.

        The law itself is ridiculous. How is affiliate link any different from a link from a blog from a person in that state? So does this law apply to someone in IL, who blogs and puts up a link to amazon, but does not earn any commission on it? I don't think so. So all they are doing is ensuring that affiliates in the state are deprived of their revenues.

        Those who do this full time, will find a way out of this mess by either moving to a different state or doing something else that will help them to continue with their business. these are just unnecessary roadblocks.

        I think a simple federal rule about selling to the residents of a state will result in sales taxes being collected for that state will suffice to level the playing field or another rule that taxes online sales equally for all states will level the playing field.

        Without these, any complex rules will only close down the affiliate model if majority of the states do this. Or affiliates from other countries will have a field day.

        Hope this mess is resolved soon.
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  • Profile picture of the author N4PGW
    Howdy,

    I live in North Carolina, one of the states that passed what is known as "The Amazon Tax".

    Here is how it works.

    The state governments have declared that companies who use "affiliate marketers" to promote their product have a presence inside the state and are subject to the laws of that state for in state business.

    Therefore, Amazon.com would be required to collect sales tax from all sales originating from, in my case, North Carolina. Therefore, they terminated the affiliate program to residents of the state. I can no longer be an affiliate.

    I considered using an out-of-state address to conduct business, but then came to realize that I might be held liable for sales tax of all sales Amazon made to this state since the day they enacted the law. (How many $5000 TVs did Amazon sell to NC in the last three years?) The law is illegal but I don't want to test it in court.

    As a result of the termination of the program, Amazon.com does not fit the definition of the 'in state business' and is not required to charge, report or collect state sales tax for any sale in the state.

    As for the person owning a digital product business in any state, sales made to others inside the same state may be subject to sales tax depending on the laws of that particular state. You will need to consult a tax specialist in your state to see if it applies to you.

    If you have an affiliate in any state that supports the "Amazon Tax", you may be responsible for sales tax due for any sale you made to anyone in that state. You may want to consult your lawyer.

    Anyone living in one of the Amazon Tax states knows that Clickbank charges sales tax for sales made to these states.

    Amazon.com makes tens of millions of dollars in sales per year in some of these states. That would equate to about $80,000 per $ million in sales tax at 8%. It is easy to understand why the states would go after big businesses.

    For the one of these states to go after a small business vendor that has affiliates in the state could be cost prohibitive. First of all, the State would be responsible for determining the total number of sales made to residents of the state. Then it would need to prove that the business has an affiliate in the state, then it would have to find the out of state business.Much of this information would not be tracked at all for digital products.

    Therefore, many marketers don't worry about sales made through affiliates in these states.

    This post may contain errors and omissions. It is strictly my opinion, not legal advice. If you want legal advice or a legal opinion, consult your lawyer.
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  • Profile picture of the author PatrickP
    yea for gov making laws to hurt the small business person in this recession.
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