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  1. #1
    Affiliate Manager
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    will the NY tax policy affect foreign merchant
    Hi all,

    1 will the NY state tax law be applicable to foreign merchant which get sale by its affiliate in NY?

    2 how does the sale define ?

    My company, dhgate, was a trading platform. All the item was listed by the seller, and we only charged a little % from the buyer`s payment as our income.
    So if the new NY state tax law is applicable to oversea merchant , like dhgate, which is the sale for us : The total amount of the buyer`s payment , or the % we charged ?

    Gump Kan
    DHgate affiliate team
    -----------------------------
    Mourn for the death

  2. #2
    Super Dawg Member Phil Kaufman aka AffiliateHound's Avatar
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    The % of the sales price of an item sold that is kept by the seller or transfered to some other party after the fact does not matter, nor does it matter that you are a foreign corporation. If you have NY based affiliates and meet the threshold of $10,000 in sales to NY residents, you must collect sales tax over and above the purchase price of your products sold, file sales tax returns, and pay the tax over to the NY taxing agencies. Also, by June 1, you must register as a merchant subject to collecting and reporting sales taxes.
    Since June 10, 2012 a vegan aarf but still writing the Hound Dawg Sports Blog
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  3. #3
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    Thank you so much!

  4. #4
    ABW Ambassador simcat's Avatar
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    I can't see NY having any control/jurisdiction over foreign based merchants as far as sales tax enforcement. Flip side: do U.S. based merchants monitor the sales tax requirements of every state/province in every foreign country?

  5. #5
    Super Dawg Member Phil Kaufman aka AffiliateHound's Avatar
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    Quote Originally Posted by simcat
    I can't see NY having any control/jurisdiction over foreign based merchants as far as sales tax enforcement.
    If big0707 opened a store in NY State selling the same products he sells online, would he not have to collect and pay over NY Sales Tax? The new law removes any distinction between selling that way and selling online (if the merchant has NY-based affiliates).

    Granted, if a foreign merchant doesn't pay up, enforcement may be a problem, but I would not put it past the NY politicos to take whatever steps necessary to teach foreign online merchants they mean business.

    Quote Originally Posted by simcat
    Flip side: do U.S. based merchants monitor the sales tax requirements of every state/province in every foreign country?
    I'd be interested in hearing from some merchants who ship internationally on how they handle this.
    Since June 10, 2012 a vegan aarf but still writing the Hound Dawg Sports Blog
    "If you don't have time to do it right, when will you have time to do it over?" -John Wooden;
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  6. #6
    ABW Ambassador simcat's Avatar
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    I believe this whole thing is based on an interpretation of a Supreme Court ruling in 1992. Woudn't that apply to US business only (implied)?

    In accordance with a 1992 Supreme Court case involving an old-school mail order business, American e-tailers are required to collect sales tax only if they have a "physical presence" in the state where a customer resides. Otherwise, the onus is on the customer...
    http://www.theregister.co.uk/2008/04...es_amazon_tax/

    Anyway, if I was a foreign e-tailer, and NY told me to jump, would I say how high? No, I'd show them my middle finger.
    Last edited by simcat; May 19th, 2008 at 01:18 AM.

  7. #7
    Super Dawg Member Phil Kaufman aka AffiliateHound's Avatar
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    Quote Originally Posted by simcat
    I believe this whole thing is based on an interpretation of a Supreme Court ruling in 1992. Woudn't that apply to US business only (implied)?


    http://www.theregister.co.uk/2008/04...es_amazon_tax/

    Anyway, if I was a foreign e-tailer, and NY told me to jump, would I say how high? No, I'd show them my middle finger.
    The laws of a soverign nation apply to anyone or anything present in that country. The NY law holds that any merchant who falls under its purview is "present" in NY, just as if it had rented a building and was selling its product on Times Square to passersby. Just as homicide statutes make it illegal for both native New Yorkers and resident aliens to commit murder in NY, the sales tax law applies to every merchant "present" in the state. Enforcement is another issue, and if NY obtained a judgement against a foreign corporation for unpaid taxes, enforcing it and collecting in the mechant's country may well be impossible.
    Since June 10, 2012 a vegan aarf but still writing the Hound Dawg Sports Blog
    "If you don't have time to do it right, when will you have time to do it over?" -John Wooden;
    "Raj, there’s no place for truth on the internet." -Howard Wolowitz[/SIZE]

  8. #8
    ABW Ambassador simcat's Avatar
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    Sorry, I just can't see even NY thinking they have the legal right/jurisdiction/enforcement to force people in other countries to do their tax collecting for them.

    NY may say they have a nexus. I may say I have the ability to
    fly and x-ray vision. Doesn't make it so.

    In your examples the homicide takes place in NY, the person buys from a shop in NY.

    In the ecommerce situation the item is sold by and from china. Never sets foot in a NY shop. Affiliate never sees or touches it.

    The NY customer is supposed to pay sales tax to NY. That comes back to enforcement I guess. Forcing other countries to collect NY tax? don't think so.

    Anyway this topic makes my head hurt, so I'm done with it. As always consult your attorney, not message boards for legal advice.
    Last edited by simcat; May 19th, 2008 at 02:16 AM.

  9. #9
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    I'd be interested in hearing from some merchants who ship internationally on how they handle this.
    AffiliateHound, I have the same interesting with you.

    For example, a NY publihser join a China online merchant`a affiliate program at Shareasale.com. Then the publisher drove a UK client to the Chinese merchant site. The UK client paid the Chinese merchant which ship the item to him via UPS.

    This is real situation I face right now.

  10. #10
    Super Dawg Member Phil Kaufman aka AffiliateHound's Avatar
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    Quote Originally Posted by simcat
    Sorry, I just can't see even NY thinking they have the legal right/jurisdiction/enforcement to force people in other countries to do their tax collecting for them.

    NY may say they have a nexus. I may say I have the ability to
    fly and x-ray vision. Doesn't make it so.

    In your examples the homicide takes place in NY, the person buys from a shop in NY.

    In the ecommerce situation the item is sold by and from china. Never sets foot in a NY shop. Affiliate never sees or touches it.

    The NY customer is supposed to pay sales tax to NY. That comes back to enforcement I guess. Forcing other countries to collect NY tax? don't think so.
    The bottom line is the constitutionality of the law. NY is saying that having the affiliate in NY is the same as the merchant physically being in NY. As you say, that doesn't make it so.
    Since June 10, 2012 a vegan aarf but still writing the Hound Dawg Sports Blog
    "If you don't have time to do it right, when will you have time to do it over?" -John Wooden;
    "Raj, there’s no place for truth on the internet." -Howard Wolowitz[/SIZE]

  11. #11
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    IMO, the rule of “no tax” in online selling is only valid within the country while international trading has to meet the custom duty applied in the destination country.
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  12. #12
    Staril - Mad Cat Woman Sue's Avatar
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    International sales are really confusing ... even more tax wise.

    I know that if I order items from the UK, then they shouldn't charge me VAT (tax) as I will be charged Swiss tax when it arrives here. But very few online merchants actually do that ... most don't even mention it.

  13. #13
    Moderator MichaelColey's Avatar
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    A foreign merchant would probably be very low on the enforcement list, but the state of NY has the same jurisdiction over a foreign company with affiliates in NY as they do over an out of state domestic company with affiliates in NY. Just what that jurisdiction is will play out in the courts over the next several years.
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