Affiliates Beware: Will Your State Kill Your Business with Amazon Tax
So what will you do if your business success depends on affililate income? Move to another state? Listen carefully. Stay in touch with Quansite. Set up Google Alerts for Affiliate Tax (or other related terms). Sharpen the saw with weekly news updates from your government or "watch organization" such as The Tax Foundation.
The government will tax the internet income. It is only a matter of time. How and when is to be determined but it looks like the signs are here. Be sure to set up your business legally and follow the laws of the land in regards to how you market your business.
by John Paul Micek · Quansite
Colorado just killed thousands of small businesses whose revenues are based on affiliate sales. They follow on the tail of 3 other states with similar laws in place already, and 14 more states nipping at their heels. Whether you are an affiliate or you run an affiliate program, you need to know how this rabid pack of looters can do serious damage to your business, maybe even kill it all together. Here's why:
Amazon first to fight back . . .
When Colorado passed this new onerous tax law, they forced Amazon’s hand. With one of the world’s largest affiliate programs, Amazon had learned from their experience with New York state when NY passed an Affiliate Nexus Tax. Amazon immediately notified every affiliate in Colorado that they were canceling their affiliate referral program in the state.
Basically they called Colorado’s bluff (CO didn’t think they would ever do what they did) and in the process they took a stand for us all.
Read the rest of the article at Quansite
Expansive Nexus Standards Burden Interstate Commerce, Harm Economic Growth
Washington, DC, March 8, 2010 -- As more states consider enacting so-called "Amazon tax" laws to force online retailers to collect sales taxes, a new Tax Foundation report cautions that such policies would not only fail to relieve short-term budget problems but also hurt long-term economic growth.
New York, Rhode Island, North Carolina and Colorado have Amazon taxes, and the Multistate Tax Commission last week indicated its plans to draft model legislation based on the laws in place in those states.
"Enactment of an Amazon tax is an aggressive and unconstitutional assertion of state power," said Joseph Henchman, the Tax Foundation's Tax Counsel and Director of State Projects, who authored the report. "These taxes are the latest in a series of efforts to eliminate the long-standing 'physical presence' standard and replace it with a nebulous, arbitrary 'economic presence' standard, where businesses can be taxed in every state where they have customers - meaning retailers large and small must track more than 8,000 sales tax rates and bases."
"This flies in the face of the argument that Amazon taxes 'level the playing field' between brick-and-mortar and Internet-bases businesses," Henchman said.
Tax Foundation Special Report, No. 176, "'Amazon Tax' Laws Signal Business Unfriendliness and Will Worsen Short-Term Budget Problems," is available online at http://www.taxfoundation.org/publications/show/25949.html.
Read more about the report: "Amazon Taxes" Will Worsen Budget Problems, Deter Business