ASE09 Session: Advertising Tax Impact, Accomplishments and the Future
Guest Post by Dominic Fawver.
Session Description: Discussion on the Advertising Tax by industry leaders that have played a key role in organizing industry advocates and educating legislators on the impact of state tax nexus legislation. The panel included:
- Brian Littleton, President / CEO, ShareASale.com (Twitter @Brianlittleton) (Moderator)
- Karen Garcia, Partner, GTO Management (Twitter @karengarcia)
- Beth Kirsch, Volunteer, Performance Marketing Association (Twitter @bethkirsch)
- Melanie Seery, President, Affiliate Voice (Twitter @mellies)
This session was very informative and gave a lot of information concerning the current problems affiliate marketers are having with some of the new tax laws, or rather the new interpretations, of the tax laws. One of the most important facts given was that the definition of “Nexus” has been recently changed, or rather updated. For a business to have Nexus, they must by physically present in the state. The change in definition holds that affiliates living in a state count as Nexus in that state. This is important because it requires all of the merchants to charge their customers the state sales tax. The issue is not that the companies should charge this sales tax, but that it is often cheaper for them to drop their affiliates in whichever states are affected, instead of adding the ability to charge the sales tax on their site.
The chief purpose of this session was to bring people up to speed on the legislation that has been put into affect or has been defeated in several states such as New York, Hawaii, and California. This is important because it will soon affect any state that charges sales tax, which is most of them.
From the standpoint of someone new to the industry this was a very important session to attend, as it helped to bring me up to speed, so to speak, with some of the major issues which are currently impacting Affiliate Marketing.
Read MoreCalifornia Assembly Bill 178
Many in the affiliate marketing industry are aware of what happened last summer with the New York State affiliate tax, also known as the Amazon Tax. The state laws were amended to include affiliates as agents of the merchant, requiring the merchant to charge sales tax for purchases made to New York residents. As a result, many merchants took the easy way out and decided to drop all NY state affiliates from their programs. This resulted in an immense loss of revenue for several affiliates.
Unfortunately, several other states are following suit, most notably California, Hawaii, Minnesota, Tennessee, and Connecticut. The most pressing of which is California, looking to enact the new bill ASAP with a hearing scheduled for April 13th in Sacramento.
In layman’s terms, AB 178 changes the definition of a “retailer engaging in business in this state” to include any retailer that works with affiliates in this state where the gross receipts or sales prices is over $10,000 per year. Feel free to read the entire bill online here.
Being a California resident myself, I can tell you that this will have a huge impact on the affiliate marketing industry. One of the major affiliate networks, Commission Junction, is located in Santa Barabara. Several super affiliates are also based in California. As well, Amazon, one of the largest affiliate merchant programs out there, has already testified that they will drop all Hawaii affiliates if Hawaii’s legislation passes, so that can’t be good news for California or the other states.
This bill is short sighted and ill conceived, and we need the help of everyone in the affiliate marketing industry to fight it. A legislative day has been planned for next Tuesday, March 31st, where several of us are going to Sacramento to speak with legislators and their staff about the ill effects this bill will have. If you are interested in also participating, please feel free to email me at trisha [at] newedgemedia.com and I will gladly pass the information to the organizers.
Read More
