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 Alliance (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.

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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.

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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.

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