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April 17th, 2008, 10:06 PM #1New York says web site affiliates are basis for sales tax collection
New York says web site affiliates are basis for sales tax collection
New provisions proposed for a New York State sales tax law, if signed by the governor, would require online retailers based outside of the state to collect and remit sales tax on customer orders received through affiliate web sites based within New York.
The provisions, which experts say could set a precedent for other cash-strapped states, were passed by the New York state legislature recently as part of a state budget bill in an effort to raise $50 million for the remainder of the state’s current fiscal year in sales tax revenue from online retailers. Gov. David Paterson is expected to sign the budget bill, making it effective June 1, according to the state budget office.
The provisions would amend a sales and use tax law on the books since 1965. That law requires New York state residents who purchase items outside of the state to pay New York a “use” or sales tax if they were not charged sales tax in the state of purchase. As in other states that charge sales tax, the law also requires out-of-state retailers to collect and remit sales tax on products sold to New York residents if the retailers maintain a physical presence, or nexus, in the state.
The proposed provisions to the law expand on the definition of nexus to cover New York-based web site affiliates that forward customers to an out-of-state online or catalog retailer. “The provisions cover certain Internet retailers that we believe have a physical presence in New York, and the provisions have determined that New York-based affiliates of remote online sellers qualify as a brick-and-mortar presence,” a spokesman for the state’s Department of Taxation says.
The spokesman mentioned Amazon.com Inc. as a particular target of the provisions because it’s a large retailer that doesn’t collect sales in the state like other large retailers with physical stores as well as retail e-commerce sites. A spokesman for Amazon declined to comment, noting that the retailer was still reviewing the state’s proposed changes to sales tax requirements.
New York state officials supported the change in the law regarding sales tax collection to help replace a shortfall in tax revenue caused by a tight economy, the taxation department spokesman says. The change is expected to go into effect on June 1 and raise $50 million in sales tax revenue in the remaining 10 months of the fiscal year ending March 31, 2009, and raise $73 million in the full fiscal year ending March 31, 2010, a spokesman for the state budget office says.
Retailers doing less than $10,000 through affiliate sales are exempt from the law, the state budget spokesman adds.
The New York action could lead to similar legislative efforts in other states pressed for finding ways to generate revenue, says Daniel Schibley, a tax analyst for CCH Inc., a Riverwoods, IL-based unit of Wolters Kluwer that publishes tax and legal software and publications. “A lot of states will look as this new idea of collecting tax on remote sales,” he says.
April 17th, 2008, 10:16 PM #2
- Join Date
- January 18th, 2005
- St Clair Shores MI.
Problem comes when states like NY refuse to pay what they'd collect for other states on the same type taxation laws. They just want revenue coming in one directionWebmaster's... Mike and Charlie
"What have you done today to put real value into a referral click...from a shoppers viewpoint!"
April 18th, 2008, 12:06 AM #3
- Join Date
- November 14th, 2005
- Chapel Hill, NC
1...All NY based affiliates must move out of state.
2..All NY based affiliates must host there sites on host servers
provided by the state of NY so that clicks can be tracked in Albany.
3...All NY affiliates must move there operations to the Bahamas.
4...Smaller merchants will not accept NY affiliates.
And this spreads across the country. Another nail in the coffin of American business.
A positive here is that affiliate marketing is becomming large enough to be noticed.You must climb this mountain. There is no elevator. ---- Don't stick your finger in the liquid nitrogen.
April 18th, 2008, 12:15 AM #4
Well, ok, if, as an affiliate, I qualify as a brick and mortar presence, I would like for them to build me a nice office, give me a dedicated HR representative, healthcare benefits, etc, etc.
Affiliates are NOT employees. We provide marketing services on a contractual basis. I don't see how they can say we are a "brick and mortar presence". What about refer-a-friend word of mouth campaigns where someone refers someone and gets some perk for doing so? Does that constitute a "brick and mortar presence" too? That's simply ridiculous.-Don't criticize anyone til you've walked a mile in their shoes. Then when you do criticize them, you'll be a mile away and have their shoes.
- Silence is golden. Duct Tape is silver.
April 18th, 2008, 01:41 AM #5
April 18th, 2008, 02:01 AM #6
Maybe every state should have their own version of this dingbat law, then we could have no real benefit, but a lot more work for accountants, overhead, paperwork, and probably lower commission rates for affiliates.
If merchants like amazon are getting an unfair break, maybe that would be a good reason to have a ntnl. sales tax (replacing the income tax)
I don't see how they can say we are a "brick and mortar presence".
April 18th, 2008, 02:36 AM #7Originally Posted by HardwareGeek-Don't criticize anyone til you've walked a mile in their shoes. Then when you do criticize them, you'll be a mile away and have their shoes.
- Silence is golden. Duct Tape is silver.
April 18th, 2008, 07:14 AM #8
I'm in NY. My sites reside in Virginia. The merchant might be in Ohio. The customer in Texas. Where's NY figure they deserve a piece of that?
Similarly, will they then allow me to write off a more significant portion of my at home expenses, considering I'm now a brick and mortar presence?
April 18th, 2008, 07:45 AM #9
This is just another excuse to take people's money. They claim it's because of the economy but we all know when the economy improves the tax will not go away but will only continue to increase. I wish they would put that much effort into being fiscally responsible instead of constantly coming after us for more money. They should bring performance pay to government. Do that and most politicians would not get paid. Fail 3 years and you're out and can't run for office again.
April 18th, 2008, 08:50 AM #10
Eliot's replacement needs hooker funds, they ain't cheap you know.
April 18th, 2008, 09:34 AM #11
New York would basically set off a wave of State based legislation throughout the country, eventually leading to a national sales tax, and tons of paperwork, what a nightmare. Can you imagine the arguments about what a national sales tax should be set at, let alone states rights vs. fed government.Following everyone else is a GREAT way to become average.
April 18th, 2008, 09:43 AM #12
Every time I hear this type garbage from politicians what I get out of it is "You keep way too much of the money you earned. We do not want to operate within our budget so you need to hand over more of your money to us."
April 18th, 2008, 11:23 AM #13I'm in NY. My sites reside in Virginia. The merchant might be in Ohio. The customer in Texas. Where's NY figure they deserve a piece of that?
April 18th, 2008, 03:14 PM #14
I found an article that I thought was interesting... from a 1992 court decision ...
President/CEO - ShareASale.com, Inc.
April 18th, 2008, 03:26 PM #15
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