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  1. #1
    Analytics Dude Kevin's Avatar
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    What I learned from the call today
    Just my interpretations of opinions given by the lawyer on the call....

    1.) Traditional affiliate marketing does not constitute a nexus, based on the wording of the May 8th memo. The memo, PERHAPS, is a direct response to the Amazon lawsuit in an effort to keeping the law "constitutional".

    2.) NY affiliates cannot specifically target NY customers in any form out side of web links and remain "unaffected" in the eyes of the merchant.

    3.) The merchants, not the networks, are specifically charged with knowing the revenues of all performance based activity done by NY residents to NY customers.

    4.) NY affiliates MAY (and this is still a sticky one) email market to NY residents providing they do not SPECIFICALLY mention a merchant by name in the email. Mentioning a merchant name would potentially qualify as "additional activity", and therefore make them a party to the nexus definition.

    All in all, I think the call was what I expected, and a good one. here's the downside.

    Merchants still have to apply as a tax entity, then rebut that they have a nexus in NY based on having only traditional affiliates. Second, the burden of proof falls on them to prove that their affiliates are NOT engaging in "other activity".

    Might still be too much responsibility for some merchants to hold on to NY affiliates at least, and perhaps their programs, at worst.
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  2. #2
    Member DougNY's Avatar
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    Kevin,

    Thank you. It sounds like there really isn't too much to be concerned about.

    I hope it doesn't 'scare' too many merchants.

  3. #3
    Analytics Dude Kevin's Avatar
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    Well, I wouldn't go that far. Whenever a merchant is charged with tracking anything, and being responsible for anything, they need to make a decision. Most will follow the path of least resistance... i.e. Will it be more work than what we are gaining from these affiliates is worth.

    Also, this is again just my thoughts on it. Each legal team from each merchant will have to study this closely.

    In the meantime, it's very nice to have Shareasale taking such an active stance on this. I think Brian has it right. Question is, will the merchants agree.
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  4. #4
    ABW Ambassador Boom or Bust's Avatar
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    Quote Originally Posted by Kevin
    Merchants still have to apply as a tax entity, then rebut that they have a nexus in NY based on having only traditional affiliates. Second, the burden of proof falls on them to prove that their affiliates are NOT engaging in "other activity".
    Might still be too much responsibility for some merchants to hold on to NY affiliates at least, and perhaps their programs, at worst.
    So, they're saying that ALL U.S. online merchants with affiliate programs [with NY affiliates] must register with NY as a tax entity?



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  5. #5
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    1.) Traditional affiliate marketing does not constitute a nexus, based on the wording of the May 8th memo. The memo, PERHAPS, is a direct response to the Amazon lawsuit in an effort to keeping the law "constitutional".

    How is "traditional affiliate marketing" defined?

    2.) NY affiliates cannot specifically target NY customers in any form out side of web links and remain "unaffected" in the eyes of the merchant.

    Okay so NY spammers can't spam New Yorkers. I'm cool with that. What about geo-targeting?

    3.) The merchants, not the networks, are specifically charged with knowing the revenues of all performance based activity done by NY residents to NY customers.

    Merchants will have to have access to the addresses of affiliates.

    4.) NY affiliates MAY (and this is still a sticky one) email market to NY residents providing they do not SPECIFICALLY mention a merchant by name in the email. Mentioning a merchant name would potentially qualify as "additional activity", and therefore make them a party to the nexus definition.

    Oops, no problem for most spammers.

    All in all, I think the call was what I expected, and a good one. here's the downside.

    Merchants still have to apply as a tax entity, then rebut that they have a nexus in NY based on having only traditional affiliates. Second, the burden of proof falls on them to prove that their affiliates are NOT engaging in "other activity".

    I like lists. Is there a list of these "other activities?"

    Might still be too much responsibility for some merchants to hold on to NY affiliates at least, and perhaps their programs, at worst.

    What about "undue burden" as a challenge to this law?

  6. #6
    Analytics Dude Kevin's Avatar
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    @Boomers: All merchants that have a presence in NY, as defined by the new legislation, have a PRESUMPTION of nexus, therefore they most register. They can then rebut it based on the terms of the memo.
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  7. #7
    Analytics Dude Kevin's Avatar
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    @ Rhea:

    1.) For the purposes of the call today, "traditional" affiliate marketing was described as nothing more than a website link, with no other "additional marketing activities", primarily email (as further discussed below), flyers, phone marketing, or physical mailing.

    2.) NY affiliates may SPECIFICALLY target non NY residents by any means of their choosing without being affected by the nexus definition.

    3.) Correct. Merchants must in some way determine the NY affiliates, and their sales to NYers. It was noted on the call that estimations are often used in these cases. I have no further info on that.

    4.) As far as naming merchants specifically, that one seems wide open, and might provide some legal sticking points. These are the cases where you REALLY need your attorney's advice.

    List of Other activities, as stated on the call:

    Telemarketing
    Physical mailing
    emailing
    distributing flyers, etc.

    I can't speak to the "undue burden" piece, as it was not addressed on the call.
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  8. #8
    ABW Ambassador Boom or Bust's Avatar
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    Quote Originally Posted by Kevin
    @Boomers: All merchants that have a presence in NY, as defined by the new legislation, have a PRESUMPTION of nexus, therefore they most register. They can then rebut it based on the terms of the memo.
    Ok, so that precludes merchants outside of NY. Your original statement seemed to say that any merchant with a NY affiliate (whether located or with a nexus there or not) would have to register and then rebut. That's a relief!



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  9. #9
    Analytics Dude Kevin's Avatar
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    Wait up now Boomers. Per the legislation, if you have NY affiliates, you have a presence here, and therefore the PRESUMPTION of nexus.
    Kevin Webster
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  10. #10
    ABW Ambassador Boom or Bust's Avatar
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    So, what it boils down to is the definition of NEXUS. Got it!



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  11. #11
    Moderator MichaelColey's Avatar
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    Quote Originally Posted by Kevin
    All merchants that have a presence in NY, as defined by the new legislation, have a PRESUMPTION of nexus, therefore they must register. They can then rebut it based on the terms of the memo.
    I think they said that on the call, but is that the case? Reading the TSB, Example 6 (where they have > $10K in NY affiliate sales to NY customers but no solicitation other than through the web site) says that the company "may successfully rebut the presumption that it is making taxable sales in New York State through New York State resident representatives and ... is not required to register for sales tax purposes."
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  12. #12
    Analytics Dude Kevin's Avatar
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    Hmmm. Maybe the missing link here Michael is what's the step between "registering" and "rebutting".

    Is just not doing anything sufficient? I've often found that when it comes to taxes, doing nothing is a bad idea
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  13. #13
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    Plus once you register, you MUST file even if you do NOT owe sales tax. Or they will fine you. I know this from personal experience.

    Thank you for posting Kevin, this does clear up some questions, and the merchants I manage should be unaffected for a long time to come.
    Deborah Carney
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  14. #14
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    I got into the call late so I guess I missed the part about registering. If the law still requires a merchant to register then claim they do not have a nexus, as their affiliates do not engage in "something more" for example email, telemarketing, etc. IMO many merchants may decide it's just too much bother and terminate NY affiliates. We recieved terminations today from Terrys Village and Oriental Trading Company. No mention of NY law only last date of 5/31/08. I agree with Kevin that it looks positive for NY affiliates ( at least more positive than originally thought), however it seems there are still many unanswered questions especially from the merchants point of view. I aslo agree with Kevin regarding Brian at Share a Sale taking the lead on this one. It is the merchants responsibility to know the NY sales through NY affiliates BUT the networks need to provide this information to the merchant. Feel free to correct me on any of this, I feel the more I learn the less I understand.

  15. #15
    Analytics Dude Kevin's Avatar
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    The only correction I would make is that we're unclear still as to who has to "register". Short of that, I think you're right.
    Kevin Webster
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  16. #16
    Moderator MichaelColey's Avatar
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    Quote Originally Posted by smallaff
    It is the merchants responsibility to know the NY sales through NY affiliates BUT the networks need to provide this information to the merchant.
    Legally, it is entirely the merchant's responsibility to determine whether or not they have a NY nexus. NY won't go after the networks - just the merchants.

    It would be good, of course, if the networks could or would provide the numbers. But it's not going to happen. With the big networks (CJ, LinkShare, and Performics), their development cycles are far too slow to get something out in time. It would probably take them months (if ot years) to build something, from past experience. We have a week. With most if not all networks (SAS included), they don't have enough information to determine total sales generated by NY affiliates to NY customers. Most don't capture the customer's ship to address, so there's no way for them to do the "NY customers" part.

    Inability of the merchant to get the numbers won't justify not complying with this law.
    Michael Coley
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  17. #17
    "An Englishman In New York" TJ's Avatar
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    Quote Originally Posted by loxly
    Plus once you register, you MUST file even if you do NOT owe sales tax. Or they will fine you. I know this from personal experience.
    I found this out the hard way too ($50)
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  18. #18
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    Quote Originally Posted by TJ
    I found this out the hard way too ($50)
    Yup, plus more fines if you forget to pay that first $50. It's crazy. If this happens for all 50 states.... lots of paperwork and possible fines.
    Deborah Carney
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