Faces & Voices behind the Affiliate Nexus Tax Mistake
Recently I was asked to come to San Francisco and participate in shooting a video to help convince legislators here in California that passing a nexus tax law similar to those passed in New York, Rhode Island, and North Carolina would be detrimental to the state economy, rather than positive. Unfortunately I fell ill at the last minute and was unable to participate, but I recently see that the video the Performance Marketing Association put together is available online and really puts some faces to the issue.
I hope this will help legislators reconsider their views on the advertising tax and consider it’s impact on 25,000 small businesses here in California. Please take a look at the video and do what you can to share it. If you’re sharing on Twitter, please use the hashtag #noadtax.
They’ve already been thanked once, but I’ll send out another big thanks to those that spared their time and opened their offices to the shooting of this short video:
- Rebecca Madigan, Performance Marketing Association
- Loren Bendele, Savings.com
- Alan Gray, Newsblaze.com
- Kevin Johnson, Ebates.com
- David Lewis, Cashbaq.com
- Lisa Picarille, LisaPicarille.com
- Eva Rosenberg, TaxMama.com
- Brook Schaaf, Schaaf-Partnercentric
Fighting the Advertising Tax in Sacramento
I wish I could tell you that we had an incredibly productive day in Sacramento, educating numerous state senators personally about affiliate marketing. They all understood what we do and they all agree that adding language to tax bills that make affiliate partners consistute nexus for out-of-state merchants is not going to make the state any money and is a bad idea.
I wish I could tell you that.
Instead, I report back after going to Sacramento last Wednesday, May 12th, with some less-than-uplifting realities about our state government here in California. Late last week, the Performance Marketing Association learned that there was a meeting on the 13th in CA senate subcommittee 5 to discuss adding affiliate nexus language to one of their pending budget bills. It’s not yet back, officially, in the form of a bill in the CA senate or assembly, but just knowing that they’re discussing it is enough for us to try to go educate some lawmakers on what affiliate marketing is, why affiliates shouldn’t create tax nexus for merchants, and why the state won’t actually make the $1.7 million they think they will.
I was asked to join Lisa Picarille and up we went to the capitol, no appointments made due to the last-minute nature of the trip, with high hopes of talking to the three state senators sitting on the subcommittee and laying some education on them. We knew that other affiliates and fighters in this advertising tax battle had previously met with Senator Denise Moreno Ducheny, the chair of the subcommittee and the state Budget and Finance committee, and had not had good luck in getting through to her, so we targeted her office first. She was booked solid in meetings, but we were given a time to check back to see if one of her staff members had a small window of time to talk.
So we went on to the office of Senator Robert Dutton, who we’d heard was on our side. We spoke with a nice staffer in his office who was very well versed on the affiliate nexus issue and assured us that Sen. Dutton opposed the language and that most the Republicans were probably on our side as well. It was very nice to meet with someone who actually knew what we were talking about and understood the issue. In the two previous times I’ve gone to Sacramento, we had uphill battles trying to explain affiliate marketing to blank-faced staffers, so his knowledge about the issue definitely allowed us to cut right to the chase. He suggested some other people we talk to, some influential to the budget committee and subcommittee, and some already on our side that might be able to help in other ways.
Lisa and I then set out for Senator Alex Padilla’s office as it wasn’t yet time to check back in to see if Sen. Ducheny’s staff could talk to us. We were unable to speak to the people Sen. Dutton’s office had recommended, but we spoke to the legislative director who was very interested in learning more and very interactive. He asked us a lot of questions to better understand the issue, and was very interested in the information about Rhode Island not realizing the projected revenue from their version of the advertising tax and their consideration of repeal. Rhode Island actually has a bill in play now, H 7071, set to repeal the “Amazon Tax” but it looks to be stalled and waiting for a proper hearing. So as not to lose time, we quickly had the information emailed to him as we went about to other offices.
That’s kind of where the magic ended. I have to say, I was feeling okay at that point that people were hearing us out. I didn’t feel that any overly appreciated us being there as private citizens just wanting to spread some education and counter some mis-information being spread by the opposition, but they seemed willing to listen and comprehend. We went to the budget committee office, and they weren’t that helpful. The person we were looking for wasn’t there, and the people who were there told us we were pretty much crazy to attempt to see anyone without an appointment at this time of year. What happened to PUBLIC SERVANTS making themselves available to the PUBLIC, hmm? This served as a harsh reality (to me anyway) that our system is generally broken. We took a break, and after refreshing ourselves with some lunch, we headed back to Sen. Ducheny’s office to check in.
We arrived earlier than the time we were asked to come back, but since we had no one else to see it was worth a shot. We were ushered into the office of a staffer who was, unarguably, the worst attitude and most combative of all the people we talked to that day. She made me very glad I do not live in Sen. Ducheny’s district (40th District). The staffer kept attacking affiliates for working with out-of-state retailers in the first place. I tried to explain to her that, California being just one of 50 states, the “Buy Californian” attitude wasn’t a viable business option, but I got the distinct impression that she didn’t care. She checked her cell phone multiple times while Lisa and I were trying to pleasantly and professional counter her unprofessional combative questions, which is just plain rude no matter what the situation is. She kept asking us what we proposed the state do instead to fix the budget. I wanted to tell her that it’s THEIR job to figure that out, not ours, but instead Lisa suggested some alternatives and tried to focus on the argument that the retailers will just drop CA affiliates, and the state won’t make this money they think they’re going to make.
That being our last meeting of the day, it did leave a bad taste in my mouth about Sacramento and state politics and government in general. I hope I can be of service throughout this fight until we’ve successfully killed the advertising tax, in all forms, here in California. Until then… anyone have a million bucks we can hire a full time lobbyist with? 🙂
Read MoreASE09 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 MoreCafepress Shows No Mercy to NY Affiliates
Yet another merchant has washed their hands of NY based affiliates. I just received an e-mail from Cafepress:
As you may know, the State of New York recently enacted new legislation that addresses tax registration, collection and remittance, which challenges the CafePress affiliate business model.
Due to mounting uncertainly over these new laws we will no longer be able to support affiliates residing in the State of New York, effective July 1, 2008.
While CafePress has no tax nexus in any states other than California, Nevada and Kentucky we feel it wise to discontinue our affiliate business in New York State at this time.
Regrettably, our hand was forced into making this difficult business decision, and we openly acknowledge the loss of income this means for our New York affiliate partners. Should circumstances around this law change we will eagerly reconsider this decision.
Effective July 1, 2008 CafePress affiliate agreements with all New York residents will be terminated.
Please let me know if you have any questions.
Of course I’m not affected, but in an effort to stand tall with my NY brothers and sisters, I’m seriously considering not promoting this program anymore. Truth be told, I’ve never shown any sales with it as it’s just on some secondary web properties, and I do love their services. I haven’t reached a personal decision yet. So this makes me sad that they’ve gone this route. Alas, poor Cafepress, I knew them well.
Read MoreMerchants to NY Affiliates: Hit the Road!
June is here, which means the “Amazon Tax” law, as it’s been dubbed, is now in effect. Merchants with affiliates residing in New York state will now have to charge tax on orders of customers in New York. In short, the state of NY has decided that affiliates constitute nexus, i.e. a term used to describe whether a business has sufficient presence or activity in a state or other taxing jurisdiction to become subject to the tax(es) of the state or jurisdiction. So now in NY state online retailers with affiliates residing in that state have to charge tax, regardless of where their corporate headquarters actually are. Some good links that explain this better than I ever could are to TechCrunch’s May 14th post and Scott Jangro’s May 22nd podcast.
So many of the larger online merchants with a large number of affiliates in NY have made the decision to drop their affiliates who reside in NY. The great folks over at ABestWeb.com Affiliate Forums have kept a running list of the merchants who’ve dissed their NY affiliates. So if you’re from NY, be aware that these merchants may not approve your application if you apply in the near future.
