New York, Amazon, Affiliates & Taxes…Oh My…
The story goes this way: The State of New York has decided they need more money. So I’m sure after lots and lots of precise and thoughtful ideas (heh), they’ve now decided to start collecting taxes from online retailers.
Affiliate Marketer Shawn Collins on his website had this explanation:
“In the past, online retailers were held to the same standard that the U.S. Supreme Court set for mail-order vendors: The seller only needs to collect the tax on purchases in states where the vendor has a physical presence, such as a storefront or salesman.
Nicknamed the “Amazon Tax,” the premise is that companies with no physical presence in New York, which means their sales to New York residents don’t get taxed, will now be taxed, because Amazon has affiliates in New York.
If it passes legal challenges, I would imagine many other states would follow with similar plans, which could be bad for online merchants and affiliates.Anyhow, if the whole tax is based on affiliates living in New York, I would imagine (note – I am not a lawyer, and I am simplifying things as a layman) that if Amazon were to cease working with affiliates in New York, such a tax would be invalidated.
I’ve got to wonder if Amazon is considering such a move to keep their business as attractive to New York customers as it is now.”
Amazon of course is fighting back – and you know what? *yeah!* for them.
I do however agree with a Newsday article (which I can no longer find) that states:
“But the reality is that Amazon and other merchants with affiliate programs won’t bother adding the additional capability to collect New York tax; instead, they’ll take the far easier step of blocking any New York – based site from their affiliate programs. The result will be a tremendous loss of income for the numberous small New York businesses now participaing in afiflaite programs.
The law will also hurt companies like New York City-based LinkShare, which generates revenue by managing others’ affiliate programs. And it may make it harder for New York-based online retailers to find their own affiliates.”
And so far, I have in fact seen this prediction come true with CafePress who will discontinue supporting affiliates as of July 1, 2008.
In my humble opinion, New York simply saw the dollar signs, said “Hey why aren’t we doing this?” and didn’t even think for a moment what the implications would be – especially to their own actual brick-and-mortar businesses.
I also believe that every last State right now is sitting back drooling over what this could mean for their economy and letting New York be the guinea pig (while silently sitting in their offices with their little flags raised that say “Go New York!”.)
Know of any other companies that have decided to discontinue supporting their affiliates due to the New York Tax? Let the world know and click the comment link above!
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One Comment on New York, Amazon, Affiliates & Taxes…Oh My…
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rodeceSe on
Sun, 3rd Aug 2008 1:39 am
I agreed with you
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