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  1. #1
    Analytics Dude Kevin's Avatar
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    California Considers Similar Taxation For Online Sales as NY
    From Kiplinger.

    California too is mulling legislation that would broaden online sales tax requirements. The aim there is to define the significant business connections a company must have within a state with its online customers before the state can legally collect sales tax: for example, brick-and-mortar stores and distribution centers in the state -- or relationships with affiliates and third-party vendors in the state that profit from the Internet transactions.
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  2. #2
    Outsourced Program Manager
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    Not Happy about this at all...thanks for posting...

  3. #3
    Life is Supposed to be Fun! Rexanne's Avatar
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    Yup - I've been listening to our state budget woes a lot lately - 15 billion dollars deficit and how our Gov is gonna fix it. Figured the potential NY tax law would get his hopes up, too.

    Time to fight!
    Peace,

    Rexanne

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  4. #4
    Analytics Dude Kevin's Avatar
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    Only 48 more threads to go.
    Kevin Webster
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  5. #5
    ABW Ambassador Snib's Avatar
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    Quote Originally Posted by Kevin
    From Kiplinger.



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    Wow, that's scary. Guess we better start considering charging merchants on a PPC basis rather than through affiliate programs.

    - Scott
    Hatred stirs up strife, But love covers all transgressions.

  6. #6
    Beachy Bill's Avatar
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    Quote Originally Posted by Kevin
    Only 48 more threads to go.
    Actually, only 43. Five states do not have a sales tax. But of the 45 that do, they all have that "Use Tax" as a part of the statute. And that provision may really make the waters murky.

    I will be incorporated in Delaware before year-end.
    Bill / Marketing Blog @ 12PM - Current project: Resurrecting my "baby" at South Baltimore..
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  7. #7
    ABW Ambassador purplebear's Avatar
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    lol I will be incorporated in Delaware before year-end. [img]images/smilies/smile.gif[/img]

    Might soon get a bit crowded in Delaware.

  8. #8
    Beachy Bill's Avatar
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    Quote Originally Posted by purplebear
    lol I will be incorporated in Delaware before year-end. [img]images/smilies/smile.gif[/img]

    Might soon get a bit crowded in Delaware.
    Delaware, or Alaska, Montana, New Hampshire, and Oregon. Delaware also has favorable corporation laws, but I don't know about the other four.
    Bill / Marketing Blog @ 12PM - Current project: Resurrecting my "baby" at South Baltimore..
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  9. #9
    Super Dawg Member Phil Kaufman aka AffiliateHound's Avatar
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    I posted about this in the Overstock thread, but here is a bit more detail. (in that post I said that there might be another bill, but now I am sure this is the only one pending)

    First, the Kiplinger article misconstrues the pending CA sales tax bill. It does not relate to increasing sales tax jurisdiction over online sales per se - it only relates to digital downloads, or as the bill describes it, "electronic transmissions of information"

    AB 1956, pending since February, and given little chance to pass, as the legislature's Republican block is unwilling to pass what they consider to be a new tax on the music industry, would impose a tax on digitally downloaded music, movies, and books, etc. but it is not a new or expanded tax on tangible property. The bill itself is very short, and this is it in its entirerty:

    An act to add Section 7061 to the Revenue and Taxation Code, relating to taxation.
    AB 1956, as introduced, Charles Calderon. State Board of Equalization: sales and use taxes: tangible personal property: digital property report.
    The Sales and Use Tax Law imposes a tax on the gross receipts from the sale in this state of, or the storage, use, or other consumption in this state of, tangible personal property. The State Board of Equalization is authorized to enforce that law, as provided. This bill would require the State Board of Equalization, within 60 days of the effective date of this act, to submit a report to the Legislature on transactions involving digital property within this state, that includes, but is not limited to, a proposed regulation that would provide that tangible personal property, for purposes of the Sales and Use Tax Law, includes digital property and the economic impact of that regulation. This bill also makes findings and declarations regarding the taxation of electronic transmissions of information.
    Vote: majority. Appropriation: no. Fiscal committee: yes.
    State-mandated local program: no.
    SECTION 1. The Legislature hereby finds and declares all of the following:
    (a) The Sales and Use Tax Law, administered by the State Board of Equalization, imposes a tax on the gross receipts from the sale in this state of, or the storage, use, or other consumption in this state of, tangible personal property. (b) The State Board of Equalization is authorized to prescribe, adopt, and enforce rules and regulations relating to the administration and enforcement of the Sales and Use Tax Law. These regulations are issued by the State Board of Equalization to implement, interpret, or make specific provisions of the Sales and Use Tax Law and to aid in the administration and enforcement of that law.
    (c) Under the existing regulations, policies, and practices of the State Board of Equalization the electronic transmission of information that does not involve the transfer of tangible personal property is not taxable under the Sales and Use Tax Law. (d) Currently, therefore, if a subscriber receives a monthly report via the Internet and the only hard copy of that report is generated by the subscriber using his or her own computer, the company’s charge for the subscription to the report is not subject to tax. (e) The increased use and sophistication of the Internet and electronic equipment like personal computers, cellular telephones, and devices that store, organize, and play audio and visual files has, in turn, increased the amount of transactions in this state involving the electronic transmission of information and “digital property” that is received by a consumer through remote telecommunications from a seller. (f) “Digital property” includes products like music, movies, and books, which, if delivered in a tangible storage media, would be subject to sales and use tax in this state under the Sales and Use Tax Law, and, as such, is the digital equivalent of tangible personal property. (g) Given these developments in the types of transactions
    between consumers and sellers, it is imperative that California’s sales and use taxes reflect those developments.
    SEC. 2. Section 7061 is added to the Revenue and Taxation Code, to read:
    7061. On or before 60 days after the effective date of the act adding this Section, the board shall submit to the Legislature a report on transactions involving digital property within this state that includes, but is not limited to, the following: (a) A draft of a proposed regulation that would provide that
    tangible personal property, for purposes of the Sales and Use Tax Law (Part 1 (commencing with Section 6001) of Division 2), includes digital property.
    (b) The economic impact of the proposed regulation. (c) Changes required to ensure compliance with the proposed regulation.
    Here is a pretty goos article discussing it, and its chances of passage: Politicians push for new iTunes sales taxes

    Final note on it: Pending since February, it has failed to get out of committee.
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  10. #10
    Affiliate Manager Afilyit's Avatar
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    Typical. The government, banks, businesses, all trying to figure out how to nickle and dime people to death.

  11. #11
    Analytics Dude Kevin's Avatar
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    AH: Thanks for that. I wonder if there is a new bill that they're kicking about, since a.) They can't seem to get that one signed, and b.) New York defining Nexus so eloquently has fueled their fire.

    But thank you for the clarification.
    Kevin Webster
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  12. #12
    Analytics Dude Kevin's Avatar
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    Actually, in re-reading Kiplinger, it must be a new bill. No mention of "brick and mortar" or "affiliate" in the bill you provided.
    Kevin Webster
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  13. #13
    Super Dawg Member Phil Kaufman aka AffiliateHound's Avatar
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    Quote Originally Posted by Kevin
    AH: Thanks for that. I wonder if there is a new bill that they're kicking about, since a.) They can't seem to get that one signed, and b.) New York defining Nexus so eloquently has fueled their fire.

    But thank you for the clarification.
    I thought that too, and so I really searched and could not find another one that's been introduced, and this one has not been able to get out of the Assembly committee. It would have to pass through the Assembly committee, get, I am pretty sure, a 2/3 vote in the Assembly, and then get similar approval in the State Senate, and only then go to [edit as political - sorry] desk for signature.
    Last edited by Merchant Consultant Team; May 14th, 2008 at 09:00 PM.
    Since June 10, 2012 a vegan aarf but still writing the Hound Dawg Sports Blog
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  14. #14
    Lite On The Do, Heavy On The Nuts Donuts's Avatar
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    Everybody wants my money, I'm happy that only a few have the ability to legally take it from me by force.

    Where's Dagny when we need her.

  15. #15
    Moderator MichaelColey's Avatar
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    For those wondering which states might be next, here's CFO.com's list of the five most aggressive states when it comes to sales taxes: California, New Jersey, New York, Massachusetts and Texas. I think most will wait to see the results of the NY law, but no doubt the states are watching this closely.
    Michael Coley
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  16. #16
    Merchant & ABW Ambassador
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    I think it would be a good time for affiliates to incorportate elsewhere with online tax friendly regulations.

    1) Opportunities for affiliates
    2) Opportunities for companies / lawyers / accountants to help these affiliates/merchants

  17. #17
    ABW Ambassador Daniel M. Clark's Avatar
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    A lot of people have been talking about incorporating in Delaware or elsewhere, but I don't see how that helps the current situation. If even one affiliate lives in NY (or CA if that happens) and the merchant does more than ten grand of business to residents of the state, the law applies, right?
    Daniel M. Clark
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  18. #18
    Super Dawg Member Phil Kaufman aka AffiliateHound's Avatar
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    Quote Originally Posted by HecticDMC
    A lot of people have been talking about incorporating in Delaware or elsewhere, but I don't see how that helps the current situation. If even one affiliate lives in NY (or CA if that happens) and the merchant does more than ten grand of business to residents of the state, the law applies, right?
    I think part of the thinking is if you're a NY affiliate who "relocates" their business out of state, you won't get dumped by Overstock or other such mechants who are axing NY affiliates.
    Since June 10, 2012 a vegan aarf but still writing the Hound Dawg Sports Blog
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  19. #19
    ABW Ambassador Daniel M. Clark's Avatar
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    Right, right... I don't know why, but that aspect didn't occur to me earlier. Kind of a no-brainer lol Duh. Thanks, AH.
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  20. #20
    Analytics Dude Kevin's Avatar
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    I'm still not sure that it's been definitively stated that incorporating outside of New York will help. Amazon isn't incorporated here, and it has apparently applied to them as having agents here.

    As such, if I incorporated in Delaware, but worked primarily from New York, in some convoluted way, doesn't that almost imply the same thing as what this tax code is indicating anyhow?
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  21. #21
    Moderator MichaelColey's Avatar
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    It may or it may not. It's really hard to tell without talking with a lawyer. Although I've made the suggestion, I haven't heard back from anyone who has run it by a lawyer. On the surface, it seems like it would work, though. All the merchants have is the affiliate's address. If the affiliate is incorporated in a state other than New York (and has a mailing address out of state), how is the merchant to know that one of the corporation's owners lives in New York? Bob makes a good point that it might be considered tax evasion (although I'm not so sure since it's not the affiliate who collects, owes, or pays the tax). Nonetheless, I would suggest that NY affiliates talk to an attorney.

    The only surefire solution I know is to move to a more tax-friendly state. I know several are planning that.
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  22. #22
    ABW Ambassador newestuser's Avatar
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    I too think it could be tax evasion. I'm pretty sure, that even if you're incorporated in some other state, if your business is run, and you have workers in NY/CA, you'd still be subject to these taxes.

  23. #23
    Moderator MichaelColey's Avatar
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    But it's not the affiliate who is subject to those taxes. It's not necessarily even the customers the affiliate is referring who is subject to the taxes. It's not even the merchant who is subject to the taxes. It's the consumers. And NY is trying to get the merchant to collect it for them.

    I'm not sure I buy the idea that an affiliate who has a worker in any state should be considered to be located in that state. What if a large affiliate like FatWallet.com (based in Illinios, with about 50 employees I think) has one telecommuting employee based in New York? What if an employee lives part of the year in NY? What if they have a second home in NY? What if they are an independent contractor instead of an employee? What if it's a public company and a large shareholder lives in NY?

    There are just so many unaddressed variables in this law.
    Michael Coley
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  24. #24
    ABW Ambassador newestuser's Avatar
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    Michael, it's not completely cut & dry, but if you have nexus in a particular state, thats when you need to collect sales tax, (so I assume it's what fits these ca/ny situations).
    nexus can consist of a store presense, employees, own property there, or some other ways that are less 'provable' like even traveling there to help produce sales, or in some states like CA, even participating in a convention(like a booth or conducting a seminar) could catch you.

    If fatwallet, or any other affiliate has nexus in NY, and O finds out, I would assume they'd lump them in with the rest of the ny affiliates.

  25. #25
    ABW Ambassador newestuser's Avatar
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    here's an article explaining what I'm talking about:
    http://smallbusiness.yahoo.com/r-art...es_tax_rates-i

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