Q: How should a merchant new to affiliate marketing approach the New York nexus law?
A: First of all, for anybody not familiar with this topic, it’s also known as the affiliate tax or Amazon tax. The essence of the law is that any company with affiliates in New York state is considered to have a presence in the state and subject to charing sales tax on any purchase from a New York resident.
I would recommend that you not boot out affiliates living in New York, as some companies have done. This sort of kneejerk reaction may or may not impact purchases from New York customers, but it will definitely have a negative impact on your reputation among affiliates.
After all, even if I am not in a state that currently has such a tax, there is always a chance the same sort of legislation could come in the near future. So, if I see you removing affiliates due to this sort of law, I am going to be less inclined to promote you, since I figure I could be kicked out after doing a lot of work to make sales for you.
Also, if the New York law catches on elsewhere, as it seems to be doing, we may well be in a situation where most states have a nexus law. In that case, you’ll either have a shallow pool of affiliates to partner with or you’ll try to re-recruit the same affiliates you recently alienated in the affected states.
More information at NYaffiliatevoice.com and NYaffiliates.com at ABestWeb.
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Its scary this could be coming to CA! But I guess if it gets that popular, companies who rely on affiliate marketers won’t leave them out in the cold . . . Great, more stress in a down economy!
I believe kicking out affiliates for any reason other than a violation of the affiliate agreement or misconduct and abuse of the merchant brand are the main justifications for not allowing an affiliate to continue referring potential customers. As an affiliate, I would be more than a little upset if all my efforts became dead links links over a tax.
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Your Message@stew kelly:
I don’t really see affiliates upset about the good old days – they just don’t want to be kicked out of affiliate programs because of the state they live in.
The government will always step in and make a pleasant situation a difficult and taxing one (pun intended). I wonder if we will have another tax form for this? No, maybe they will add to the IRS code another couple of thousand words. Here’s a better idea, let’s make it a national law so we can squash all the little guys entrepreneurial spirits with more paperwork and taxes. I digress.
Great advice for affiliates Shawn. While the glory days of no Internet tax may be passing, online sales are increasing rapidly. Why a business would cut off their nose to spite their face is inexplicable. Affiliates need to adapt to the changing business environment, not crawl into their shells and moan about the good old days.
Stew
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