Comments on: Overstock follows Amazon’s lead in dropping affiliates* http://www.adotas.com/2009/07/amazon-should-stop-screwing-affiliates/ Where Interactive Advertising Begins Fri, 10 Feb 2012 17:07:34 +0000 hourly 1 http://wordpress.org/?v=3.1.1 By: Edward Barrera http://www.adotas.com/2009/07/amazon-should-stop-screwing-affiliates/#comment-776273 Edward Barrera Tue, 30 Jun 2009 19:54:58 +0000 http://www.adotas.com/2009/06/amazon-should-stop-screwing-affiliates/#comment-776273 Karen, I knew this, and still made the mistakes. It's corrected now. thanks Edward Karen,
I knew this, and still made the mistakes. It’s corrected now.
thanks
Edward

]]> By: Karen Garcia http://www.adotas.com/2009/07/amazon-should-stop-screwing-affiliates/#comment-776263 Karen Garcia Tue, 30 Jun 2009 17:52:49 +0000 http://www.adotas.com/2009/06/amazon-should-stop-screwing-affiliates/#comment-776263 Just to clarify your final paragraph and your earlier statement that "The Legislature recently passed a bill forcing companies to collect taxes from online-marketing affiliates" this isn't accurate. Neither affiliates nor merchants are the source of sales tax revenue. Affiliates collect no payments from the consumer and merchants merely collect and remit sales tax when required. Payment of taxes falls entirely to the consumer, which is in fact the crux of the problem. If you as a consumer make an online purchase from ANY retailer (not just Amazon) and you are not charged sales tax, you are required by law to keep track of how much you should have paid and remit the proper amount, called use tax, to the state with your income taxes. Although most states have had use tax laws on the books for a very long time, most consumers have no idea the law even exists, so the use tax goes unpaid and uncollected. States believe that by changing the definition of 'nexus' to force out of state merchants to collect the tax will solve the problem. The main issue with that is two fold. First, nexus has already been defined by the Supreme Court in the case Quill v. North Dakota as requiring a "physical presence" within a state. Affiliates are merely advertisers. They are not sale reps or employees of the companies they place banners for on their sites. States want to redefine nexus to include this sort of commission based advertising, despite the fact that it goes against the pre-established definition. Second, affiliate relationships are at-will and most programs can remove all of their affiliates in a particular state with a few clicks. Without affiliates in a state with one of these new laws passed, there is no legal need for them to collect and remit the sales tax and for many merchants, a much simpler soultion than trying to implement sales tax across multiple zones. (Nationwide, there are more than 12500 sales tax zones according to Avalara.) The Supreme Court in its findings noted that "Congress is now free to decide whether, when, and to what extent the States mayburden interstate mail order concerns with a duty to collect use taxes" which has led to the formation of the Streamlined Sales Tax Project, or SSTP. This push for a more uniform sales and use tax system may be the answer to the problem as twenty-two states have already adopted the simplifications measures needed for enactment. Amazon has stated its support of the SSTP in a letter to California legislators. No one is arguing that the use tax should not be collected, but it is unfair to target only the affiliate marketing community through these bills, especially when a more fair, equitable solution is at hand. Just to clarify your final paragraph and your earlier statement that “The Legislature recently passed a bill forcing companies to collect taxes from online-marketing affiliates” this isn’t accurate. Neither affiliates nor merchants are the source of sales tax revenue. Affiliates collect no payments from the consumer and merchants merely collect and remit sales tax when required. Payment of taxes falls entirely to the consumer, which is in fact the crux of the problem. If you as a consumer make an online purchase from ANY retailer (not just Amazon) and you are not charged sales tax, you are required by law to keep track of how much you should have paid and remit the proper amount, called use tax, to the state with your income taxes. Although most states have had use tax laws on the books for a very long time, most consumers have no idea the law even exists, so the use tax goes unpaid and uncollected. States believe that by changing the definition of ‘nexus’ to force out of state merchants to collect the tax will solve the problem.

The main issue with that is two fold. First, nexus has already been defined by the Supreme Court in the case Quill v. North Dakota as requiring a “physical presence” within a state. Affiliates are merely advertisers. They are not sale reps or employees of the companies they place banners for on their sites. States want to redefine nexus to include this sort of commission based advertising, despite the fact that it goes against the pre-established definition. Second, affiliate relationships are at-will and most programs can remove all of their affiliates in a particular state with a few clicks. Without affiliates in a state with one of these new laws passed, there is no legal need for them to collect and remit the sales tax and for many merchants, a much simpler soultion than trying to implement sales tax across multiple zones. (Nationwide, there are more than 12500 sales tax zones according to Avalara.)

The Supreme Court in its findings noted that “Congress is now free to decide whether, when, and to what extent the States mayburden interstate mail order concerns with a duty to collect use taxes” which has led to the formation of the Streamlined Sales Tax Project, or SSTP. This push for a more uniform sales and use tax system may be the answer to the problem as twenty-two states have already adopted the simplifications measures needed for enactment. Amazon has stated its support of the SSTP in a letter to California legislators.

No one is arguing that the use tax should not be collected, but it is unfair to target only the affiliate marketing community through these bills, especially when a more fair, equitable solution is at hand.

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