Will Amazon Stop Working with NY Affiliates?
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Disgraced former New York state governor, Eliot Spitzer, was moving aggressively on a plan to tax any Internet transactions from merchants who had affiliates in the state back in November 2007.
After an uproar, Spitzer backed down on the plan. But then he started working on it again just before the hooker scandal that bounced him from office.
I had hoped his departure from state government would take the plan to scapegoat affiliates with it.
But word was that his predecessor, David Paterson, was interested in the plan, too.
Bad news. Looks like the wheels are in motion, according to Stephen Dubner in the New York Times earlier this week.
In the past, online retailers were held to the same standard that the U.S. Supreme Court set for mail-order vendors: The seller only needs to collect the tax on purchases in states where the vendor has a physical presence, such as a storefront or salesman.
Nicknamed the “Amazon Tax,” the premise is that companies with no physical presence in New York, which means their sales to New York residents don’t get taxed, will now be taxed, because Amazon has affiliates in New York.
If it passes legal challenges, I would imagine many other states would follow with similar plans, which could be bad for online merchants and affiliates.
Anyhow, if the whole tax is based on affiliates living in New York, I would imagine (note – I am not a lawyer, and I am simplifying things as a layman) that if Amazon were to cease working with affiliates in New York, such a tax would be invalidated.
I’ve got to wonder if Amazon is considering such a move to keep their business as attractive to New York customers as it is now.
You’ve got some sweet legacy, Eliot.
- Posted in Affiliate Managers, Affiliate Opinions
13 Comments
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On April 14 @ 5:37 pm posted[...] The Amazon Tax [...]
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On April 14 @ 5:44 pm posted
[...] The Amazon Tax [...]
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On April 18 @ 2:04 pm posted
[...] has talked about this too. Here are some of his thoughts. Will Amazon Stop Working with NY Affiliates? “If it passes legal challenges, I would imagine many other states would follow with similar [...]
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On April 19 @ 5:58 pm posted
[...] or enter your e-mail on the top right to get updates by e-mail.There is a lot of buzz lately about New York’s “Amazon Tax,” and how it will impact affiliates, but one facet has been overlooked in the coverage I’ve [...]
“The seller only needs to collect the tax on purchases in states where the vendor has a physical presence, such as a storefront or salesman.”
Just wondering … Is an “affiliate” actually the same as a “salesman”? A salesman usually has a place provided by the vendor whereas the affiliate generally works out of their own home office. Hmmmm …
The “Tax the Internet” crowd really BITES! Leave the Internet alone!
Rick Wilson aka corpRebel
reply to this commentIt might be hard for amazon.com to know where its affiliates are actually located. In the case of a corporation, many are legally located in states like Delaware, even though the owner(s) never set foot there. Even individuals can, and do, work on their websites from multiple locations – anywhere that there’s WiFi!
reply to this commentHi Simon -
They require a street address in the affiliate sign-up process.
reply to this commentYes, merchants can ask affiliates where they live. But affiliates can easily use a PO Box in another state. And corporations are routinely registered in jurisdictions (such as Delaware) that the owners never set foot in.
reply to this commentAnother reason I think New York will fail to collect sales taxes from amazon and other affiliate marketers, is that the State is essentially saying that advertising in New York makes you subject to New York taxes. I wonder how the New York Times would feel about that?
They could do that moving forward, but Amazon has 10+ years of NY residents that didn’t have any reason to cloak their addresses.
There is a report today in the NY Post that online retailers outside of NY “could face audits and bills for back taxes going back years unless they agree to start collecting sales tax for the state by June 1.”
reply to this commentShawn: Amazon has stated that they won’t drop NY affiliates, as of yesterday. I know this one was, how did you put it, hyperbole, but given Dr. Foster’s and Smiths, and Overstock, I thought it was worth mentioning.
reply to this commentHi Kevin -
Thanks – I saw that in the New York Times coverage last night.
Great to see that Amazon made a statement about it.
reply to this commentI think Amazon started collecting Sales Tax from NY based affiliate links.
Can we change our physical address and ask to be resubmitted to affiliates (like overstock.com, etc.) that dropped NY based publishers?
Thanks,
reply to this commentMike
Mike -
I don’t know if they have processes in place, but I think if you move that they’d let you back in.
reply to this comment