[I.M.O.G.]

I also received an email from Chris through the ABW contact us form describing something similar. Looking into it, I share Mark's concerns. Initially in email, and currently on the site its implied "they" are already collecting funds ($500 minimum, they "dropped their rates in July") and already have legal sign-off, while the post above and asking questions implies they may not be on any sort of solid legal ground (that a lawyer would attach his name to).

Mark's advice seems wise. Be leery, ask lots of questions, choose wisely.

[AffiliateHound]

And exactly WHO is this lawyer who has reviewed their scheme, uh, I mean plan?

Is this lawyer an expect in Affiliate-Nexus Tax law, familiar with the practical aspects of the the overall problem, including how both an entity such as the California Board of Equalization and mega-merchants such as Amazon would see it, or is he/she someone with a little experience in business and/or corporate law, who may know little more or have little practical experience other than on how to set up a business entity?

[jackofaddtrades]

Originally Posted by markwelch

I believe that "Jack" is actually Chris, who on Thursday created a web site offering (for a fee) to "fix" the "Amazon tax" problem for publishers in affected states. (I referred Chris to the ABestWeb forum a few minutes before this post appeared.)

Yes - 'jackofaddtrades' is tongue and cheek. I didn't mentioned Mark pointed me here because I didn't want this to misconstrued as him having had any affiliation with me, or endorsement, etc etc.

Chris' web site is very vague, and promises details only to those who sign an NDA. His web site describes the arrangement this way: "You become a contractor similar to a commission only salesperson and earn the affiliate revenue you generate."

Well I think asking someone to sign an NDA is fair for a number of reasons. First - we'd like to sail the ship (with the rivets properly fitted) before someone tries to sink it. Point being - it's nice to be able to tell potential partners that we're looking at two structures right now, and the pros and cons of each, without fear that it's going to be vetted. That seems fair, right?

And the commission only salesperson analogy is a close one to one of the structures.

When I viewed Chris' site after he posted to my blog, I found many "red flags," leading me to quickly conclude that it was a scam. I actually wondered if this was another sham created by backers of the "Advertising-Nexus" tax laws, who've always avoided the term "web publisher" and instead used the term "commission sales person" to mislead legislators and the public about the advertising relationships they sought to outlaw.

You might have left out a few details of our correspondence...quickly conclude is sort of putting rose colored glasses on your reaction. But no biggie. Fair enough - you saw our site and thought it was a scam - that's very helpful feedback. Adjustments are being made.

I

hope that Chris is not the same person who posted earlier as "mac411," in this thread, claiming:

Not sure what happened to the mac quote, but nonetheless mac411 is not me. And I think Mark knows that, as we've corresponded and in correspondence there is a certain level of trust that might accrue. Or not. Regardless, he is not I and I am not him. I'm guessing the IP logs would verify it, but that's a bit of a digression.

As I've stated many, many times over the past two years, in posts on ABW, I strongly oppose the use of "entity games" by web publishers to try to avoid these laws, and I assume that Amazon is even more strongly opposed to these tricks.

I absolutely recognize that there are a variety of effective legal strategies that publishers can use (and should consider) to re-establish or maintain advertising relationships with Amazon and other retailers, after enactment of an "Advertising-Nexus" law in the state where the publisher works. I also recognize that very few publishers will pay for the professional advice needed to implement those strategies, and fewer still who will actually follow the advice they've paid for.

Right, but isn't that where the digression should end - in a discussion of the merits of various structures. I've read discussions of a few ideas
- get a friend and use their address
- establish an LLC in DE with mail forwarding service
- other various flavors of the above.

So I agree, those options don't work - well, to be sure, they will probably work for many publishers, but I don't think you'd find a corporate attorney to sign off on them. Nor a tax advisor.

But does that mean there is not a solution? No, not necessarily. Where there's incentive (which there is here) there are people that will look for solutions - both illegitimate and legitimate. I'm looking for a legitimate solution. Not everything on the Internet is a scam, and not everyone on the tubes is a scammer.

Yes, it's good to be on guard, ask the right questions, get appropriate advice from trusted advisors, etc. And as I think I stated earlier, either this works, or it doesn't.

IANAL

I thought you were, although were is not am, I guess. ;-)

[jackofaddtrades]

Originally Posted by AffiliateHound

And exactly WHO is this lawyer who has reviewed their scheme, uh, I mean plan?

Is this lawyer an expect in Affiliate-Nexus Tax law, familiar with the practical aspects of the the overall problem, including how both an entity such as the California Board of Equalization and mega-merchants such as Amazon would see it, or is he/she someone with a little experience in business and/or corporate law, who may know little more or have little practical experience other than on how to set up a business entity?

Yes to the former and no to the latter. The latter is not likely to have the kind of brand name you'd want to associate with (or the malpractice insurance to back up their opinions).

Why does it have to be a scheme? That's what's curious. I'm not saying that schemes (in this area) don't exist (in my last post, I mentioned a few), but isn't there at least some curiosity about how to solve the problem? Isn't that what this thread is (sort of) about?

Now, to be sure - I haven't suggested a detailed 'Step A Step B Step C voila' solution. I've provided an analogy to one. But still, there is a big gap between what I see on the affiliate discussion boards (how to get around the law through illegitimate means) and giving up on finding a solution. In that gap may be a proper (ie, legal, legitimate, pro-karma) way to do structure this. Or many ways.

And, before it's stated - yes - there are lots of structures that are revealed to be schemes that were endorsed by legions of brand name attorneys, consultants, accountants, auditors. We're aiming a bit higher than that.

Go Giants.

[I.M.O.G.]

We've mostly been talking about how to do it the right way.

When people ask about schemes to get around the law, we direct them to the full proof ways of surviving we know are solid, or consult a lawyer. Such as move, work with companies supporting CA affiliates, etc.

The options certainly aren't give up or be illegitimate. I don't think anyone here has advised anyone else to do something risky or illegal - we have explained repeatedly though when people ask about sketchy approaches, why they are bad ideas. Mark especially has provided a great deal of insight and excellent reading on that side of things!

[jackofaddtrades]

Originally Posted by I.M.O.G.

We've mostly been talking about how to do it the right way.

When people ask about schemes to get around the law, we direct them to the full proof ways of surviving we know are solid, or consult a lawyer. Such as move, work with companies supporting CA affiliates, etc.

The options certainly aren't give up or be illegitimate. I don't think anyone here has advised anyone else to do something risky or illegal - we have explained repeatedly though when people ask about sketchy approaches, why they are bad ideas. Mark especially has provided a great deal of insight and excellent reading on that side of things!

I don't disagree at all. If I said that, I misspoke - I'm a bit on guard from an aggressive email I received last night. Nobody likes to be accused of being a scammer (except, perhaps, scammers...who probably also take offense).

And I agree, I've learned a lot from Mark's posts. What I was attempting to question was why there wasn't more discussion of other ideas.

Speaking of - and I hesitate to address this because some of you will think I am mac - well...whatever.

[QUOTE]
Originally Posted by mac411
We have worked out a legal structure that allows CA affiliates to continue to run their businesses... the short version is, our private equity fund buys in and transfers ownership to an out of state parent co. The affiliate is hired as a consultant to run the site. All back office functions are run by the parent co, and there is pass-thru of revenue. There are some other details, of course, but the lawyers have blessed it. It's a bit of a complex structure...

AffiliateHound:
Does not sound legit to me.

What jumps out is 'pass-thru' and 'consultant'. If mac chose his words carefully, or is using these words together in creating this structure, then it mos likely has not been blessed by an attorney. Pass-thru and consultant - there's a disconnect there that can't be bridged. But maybe it's just loose terminology.

What I'd like to know is what the repurchase option would be is if the law changes and is now favorable towards affiliates that sold into this structure.

And of course...would the affiliates be part owners? Not if they are consultants. And not if they want to be on the right side of the nexus law from the POV of the merchant.

My attorneys are requesting some attention.

[markwelch]

One problem with all our discussions about "how to re-establish an advertising relationship with Amazon, after an advertising-nexus law is enacted," is that we're missing one of the key players: Amazon.

After two years of dealing with this issue, Amazon's Associate Team probably has a very specific list of internal guidelines and requirements, based on some expensive legal opinions, about what they consider adequate proof that a publisher in an "advertising-nexus" state has actually sold or transferred their business, or has actually relocated the business to another state. (One web publisher mentioned that Amazon asked for a copy of a utility bill to prove relocation, but otherwise I haven't heard any other specifics.)

Amazon isn't going to offer any specific suggestions or advice (at least, not to tiny publishers like me), nor publish its guidelines on the topic. Nor is the California State Board of Equalization likely to suggest or approve any particular arrangements, since its goal is to get Amazon to collect sales tax, period.

Nobody wants to poke either of the sleeping bears (Amazon or California), because we know we won't fare well when (not if) either bear gets mad -- and if we do something that starts a fight between the bears, we're dead.

[jackofaddtrades]

Originally Posted by markwelch

Amazon isn't going to offer any specific suggestions or advice (at least, not to tiny publishers like me), nor publish its guidelines on the topic. Nor is the California State Board of Equalization likely to suggest or approve any particular arrangements, since its goal is to get Amazon to collect sales tax, period.

Nobody wants to poke either of the sleeping bears (Amazon or California), because we know we won't fare well when (not if) either bear gets mad -- and if we do something that starts a fight between the bears, we're dead.

Amazon certainly has incentives to establish guidelines about how it is interpreting the law.

For example, Amazon CSRs are reinstating terminated affiliates who call in with NV or DE addresses.

That's the beginning of a policy.

And if it's true that CSRs mentioned a potential requirement of utility bills or leases, that's likely another clue. CSRs generally don't go off script, and Amazon has some of the best CSRs in the business.

(Could be a CYA tactic on Amazon's part, could be that they will actually take this step, time will tell.)

[affninja]

Just saw this article this afternoon:

Amazon wants voters to decide on tax collection.

I don't see this getting too far, but interesting idea I guess.

[AffiliateHound]

I think it will go far. The CA Initiative, Referendum and Recall system (as it currently exists, pending the slight reigning in that pending SB 168 and SB 448 would achieve) lets any corporation that wants to spend a couple million dollars get whatever they want onto the ballot.

While it normally takes at least $30 Million to actually win an Initiative, Referendum or Recall election, one that will be advertised as keeping internet purchases tax free sounds like a sure winner.

[TrishaLyn]

I can appreciate any steps for them to continue working with CA affiliates.

[Bradley.Senkovich]

Ok the most rediculous comment/question ever...

I wonder why is it that 3 states affected by these laws contain the largest networks (california, New York and Illinois).

Do you think that our beloved representatives saw these companies (CJ, GAN, SAS, LS, AF) and thought "wow they have their hands on 12,000+ business' monies, how can we get that?"

With that, do you think our government may, in the future, try to link it to doing business with the network and not the affiliate as an establishment of nexus?

SO... you have a self proclaimed 'expert' doesn't mean it will do you good... look up wesley snipes see how well his experts handled him. he's in jail they are not. Do not trust someone who got their credentials off a box of cereal.

reading through, i saw a few who were trying a shell game. You cannot get legal advice here, at the most its a "high recommendation". I do not know very many here in ABW as well as I wish i did, but i know this: Most here that i've seen in ABW has sound mind and they look out for each other.

Placing a shell company in another state is an older topic that has been touched plenty of times. Mr. Welch and Affiliatehound have both galvanized their points. Fraud is fraud is fraud. Personally, if you commit any fraud, esentially you are stealing from me (the taxpayer). I would not have any respect for you and more than likely not keep you in my program as you are basing a relationship off of lies. I will bend over backwards for affiliates, as long as you just tell me the truth.

I think Mark Welch said it best: "I hope you enjoy being Audited"

Clickinks is still small in the grander scheme of things and the CA nexus doesn't affect us. However, even if we did meet those requirements, We are planning for the tax collection as we may start drop shipping from CA. So California Clickinks affiliates are safe! (sorry, i'll shut it about my programs now).

I will say this, the UK is so much easier with their VAT... Whatever happened to the dream that was Stream Lined Sales Tax? 23 states signed up and it was a lead topic in CA then it fell off the face of the earth.

by the way 30+some days left to get on the California Referendum. get loud!

[AffiliateHound]

As to representatives intentionally targeting CJ, GAN, SAS, etc., absolutely not.

These people are totally oblivious to the concept of affiliate marketing.

A couple of months ago, I spoke to my state Senator about the pending tax, and he listened as I explained affiliate marketing to him and the effect of the law. He appeared to be hearing this for the first time, despite my sending him this information two years earlier when the prior bill was pending, and despite all of this information having been included in the official legislative analysis.

A few weeks later, the day after the bill was passed, I spoke to his chief deputy, and as I explained the ramifications to him, he told me he had no idea about any of this.

Last night, I again saw our Senator, and was able to give him some details about how I, and 25,000 others, have now actually (no speculation) been devastated by the effects of the bill. His response was basically "that's awful" and he changed the subject.

The Senator did say that he believes a national internet tax is the only real solution to the problem.

Re Wesley Snipes and all that: Great trial lawyers can sometimes do magic, but juries usually get it right, and where there is evidence of guilt beyond a reasonable doubt, the chances of an "expert" working a miracle are very, very slim. OJ Simpson was found not guilty of murder NOT because of the expertise of Johnny Cochran et al, but rather due to the total incompetence of the prosecution and of the LAPD.

[Bradley.Senkovich]

I don't remember if i was on a blog or in this channel reading that california reps expected to raise $195 million in revenue from taxes where $95 was made from amazon. With amazon trumping them out of that $95 million... I want to know who whispered these fantastical numbers into the senators' ear, but neglected the consequences... or if they were just completely uncaring for the issue as they are answering to those who hold their campaign checks for next election...

[AffiliateHound]

The official line at the end was that the tax would generate over $300 M in new sales tax revenue/yr. I do think they said around $100 M from Amazon.