Affiliate Marketing and the Internet Tax

Affiliate Marketing and the  Internet Tax

Is the Internet sales tax a way to get revenue? Of course it is, but…the issues seem to be a little more complex then people would like. Be it known, the Internet tax has been debated for years, but since the “great recession” and than the search for additional revenue by states, the issue is once again in the forefront. This, as you all know, came to a head when California signed into a law that required all online retailing sites to pay taxes on their affiliate sales, and it brought Amazon into the picture. Whom, as it has done in other states, cut their affiliate programs in the state of California.

Many affiliates in the state lost from 40 to 70% of their revenue. And, because of this lost, some moved their business to friendlier states. If you step back and look at the situation in California, you realized that is was really a lose-lose situation for both Amazon and for California.

Don’t think so. In my estimation California would gain Internet sales tax revenue, but instantly lost revenue from the affiliates that did or are doing business in the state. And, if the individuals or small businesses move elsewhere, that is more lost revenue.

Amazon, is losing affiliates from every state that decides to collect revenue from the Internet. Surely they can’t be happy about this either. This, I suppose, is why Amazon reached an agreement with California to approach Congress about addressing Internet sales taxes. If not tax solution is found, than California would once again but the tax into place. But in California’s and the Amazon affiliate issue, the case is rather mote, since Amazon is planning on putting physical call centers into the state.

When you think about it, this issue is really interesting. Why? States normally impose taxes that are usually local or state wide. In the case of Internet taxes, it’s going across state borders and is truly “interstate” in nature. Not, that they can’t legally do it, but they can.

Bills in Congress and Senate

There is currently several bills before Congress.

• Before the Senate-Main Street Fairness Act- This bill calls for a set of federal guidelines that would dictate how states could collect sales taxes from online retailers.

• Before the House-Marketplace Equity Act of 2011-This bill is a little different from the Senate. This bill gives states the authority to require retailers, online and offline, the authority to collect sales taxes even if the customers are located in states where the companies have no physical presence.

Bottomline, both bills are trying to find ways to give the states the authority to have a state-based system of taxation on the Internet.

Internet State Options Suggested
 
There has been suggestions to possible options that can make the Internet tax a little more uniform.

Some have suggested 1) nationwide sales tax in which a certain portion of the income would be given to all the states, or 2) the current idea of taxing consumers at the origin of sale and not at the destination.

The problem I see, is uniformity because overall, local taxes within the states are not uniform. A national tax would bring uniformity. Question is, but would the federal government distribute the revenue to the states?

And as to the current idea of taxing consumers at the origin, if can be a major headache for online retailers if they have to comply with a different tax from each state.

To conclude, states are definitely looking to the Internet to help solve their budget shortfalls, however, I see a little chaos before the calm before it’s all said and done.

This article is from myaffiliateplace.blogspot.com

Update To California Amazon Sales Tax

Update To  California “Amazon Sales Tax”

As you may recall from my post  about Amazon Sales Tax in California, not many people were happy.
For affiliate who reside in California and dropped by Amazon, this may be of interest to you. According to “The Sacramento Bee” Amazon has persuaded California lawmakers to delay tax collection.

Tentatively, Amazon has reached an agreement with California state lawmakers and brick-and-mortar stores to stop fighting a requirement that Internet retailers collect sales tax on any California purchases. Under a handshake deal, Amazon has accomplished delaying the sales tax in California until September 2012.

What does lay the groundwork for? Could it be a national online sales tax law. It’s seems that Amazon and retails like Wal-Mart and Barnes & Noble has agreed to lobby Washington over the next 11 months for an Internet sales tax law that would go across 50 states.

However, if no federal deal emerges by July 31,2012, Amazon would have to begin collecting California sales taxes starting on Sept. 15, 2012.

Currently state lawmakers are going to introduce a bill that will delay implementation of the online sales tax law until that date according to Assemblyman Charles Calderon D-Whittier. However, Gov. Jerry Born has not weighed in on the issue as yet.

For complete details you can read the Sacramento Bee.

Okay, this could help all affiliates if Amazon and other retailers can get a federal sales tax law implemented. Can our Congress stop arguing enough to do it? Hm-m-m, that’s an interesting question isn’t it.

This article is from myaffiliateplace.blogspot.com

Amazon, California Affiliates and Taxes

Amazon, California Affiliates and Taxes

To my surprise and many others, the California state law which went into affect on July 1, 2011 came quickly.

And as you can expect, Amazon and other online retailers will or are going to shut down their affiliate programs in the state. It has been estimated that for Amazon affiliates alone, that amounts to about 25000 sites that will no longer be able to advertise Amazon products. All sites, no matter how much money they have made for Amazon will shut down because of the new California law.

The governor of California thought that this is a “common sense idea”. However, did the state government just take an overview of how much revenue they thought they were going to make, without figuring in the possible lose of revenue, or the possibility that the bigger affiliates would move from the state? I wonder?

For those states that do not have these laws, it may be wise to court these companies, they may end up being the greatest revenue gainers in the long run.

Check out below to determine where your state is in the mix of the new law.

States where Amazon collects sales taxes:
Kansas
Kentucky
New York
North Dakota
Washington State

Why only these states? These are the only markets where it has physical stores or offices.

States where Amazon has cut ties with affiliates:

California
Illinois
North Carolina
Colorado

States at risk of being cut off by Amazon due to possible legislation:
Nevada
New Mexico
Missouri
Arkansas (Law Passed)
South Carolina
South Dakota
Minnesota
Vermont
Massachusetts
Rhode Island(Law Passed)
Connecticut (Law Passed)

Amazon has continued to use the 1992 Supreme Court Ruling of (Quill Corporation v. North Dakota) that prohibits a state from forcing a business to collect sales tax unless it has physical stores in the state.

However, because of the recession, and the shortfall many state budgets now have, the state governments are trying to get around these restrictions by passing laws that expand the definition of physical presence.
The states target are e-commerce sites that work with affiliates.

In essence if an affiliate is within the said state that has these new expanded laws of physical presence, they (Amazon) must pay the sales tax because of the sale that was created by the affiliate living within that said state.

As the states attempt to find ways to collect revenue, a new situation could be looming. Could it be federal law or the constitutionality of the state laws regarding this matter.

This article is from myaffiliateplace.blogspot.com