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  1. #1
    Affiliate Manager Howard Gottlieb's Avatar
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    New York Situation
    I am certainly not a lawyer but I have a thought about the situation in New York.

    From what I have read only affiliates that reside in New York are effected. If that is true what would prevent those affiliates from "partnering" with an affiliate from Texas, for example, who treated the New Yorker as a sub contractor running sites for them?

    Wouldn't that, at least temporarily, provide a band aid if not outright solution to the problem?

    I would be willing to work with affiliates to see if we could help.
    I would rather live my life as if there is a God and die
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  2. #2
    Moderator MichaelColey's Avatar
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    The TSB specifically addresses that potential solution, so it wouldn't work.
    For purposes of the presumption described above, a seller is also considered to have met the condition of having an agreement with a New York State resident where the seller enters into an agreement with a third party under which the third party, in turn, enters into an agreement with the New York resident to act as the seller’s representative.
    Michael Coley
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  3. #3
    Best New ABW Member 2007 sfcom's Avatar
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    What about if an interested (non-NY) party buys the NY affiliate's sites for $1 and then charges the NY aff a small percentage of the after-tax income to keep it running. The NY aff could still contribute to the site(s) in their normal manner, but the site is no longer owned by an aff in NY, eliminating the problem, right? (Well, plus the crazy job of changing over all of the publisher IDs in the links.) I am not normally a "loopholer" but in this situation this is our family. These NY affs need our help.

    -sfcom


  4. #4
    Affiliate Manager Howard Gottlieb's Avatar
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    I just read that post Michael and I think it clearly refers to sales representatives but code writers.

    It would seem to me one could take the position that the existing site owners were now offering sub contract coding to new owners of their websites. As SFCom states those sites can be sold for a dollar with a buy back agreement for sometime in the future.

    It doesn't effect me since I am in Texas. Just offering what seems to be a common sense solution.
    I would rather live my life as if there is a God and die
    to find out there isn't, than live my life as if there
    isn't and die to find out there is.

  5. #5
    Super Dawg Member Phil Kaufman aka AffiliateHound's Avatar
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    I do no think this would work, and that it certainly would not be worth the risk. The NY tax aurhorities would see through the sham transactions of $1 sales of profitable web sites, and consider them fraudulent transactions with the intent to deceive. To look legitimate, such sales would have to be for value, and the buyer could hire the seller back as an employee, being paid a "real" salary for continuing work on the site.
    Since June 10, 2012 a vegan aarf but still writing the Hound Dawg Sports Blog
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  6. #6
    Moderator MichaelColey's Avatar
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    I think it would depend on how it's structured. If it was sold to someone outside of NY, that's one thing. If it's just running through another affiliate and the NY affiliate still gets paid a percent of sales, I think that's exactly the loophole that provision is covering.

    If the NY resident is acting as a subcontractor to an affiliate that isn't in NY, that's not really addressed (and could go either way depending on how NY interprets it). How much presence in NY does it take for an affiliate to be considered a NY resident affiliate? What if they have two homes and one is in NY? What if they have mulitiple employees (or owners) and one is in NY? The law and the TSB doesn't cover those points.
    Michael Coley
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  7. #7
    Best New ABW Member 2007 sfcom's Avatar
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    Quote Originally Posted by AffiliateHound
    I do no think this would work, and that it certainly would not be worth the risk. The NY tax aurhorities would see through the sham transactions of $1 sales of profitable web sites, and consider them fraudulent transactions with the intent to deceive.
    Just wondering how NY tax authorities would ever know that such a sale occured. For all they would know, the affiliate could have retired, not paid their hosting bill, or just gave up AM. In most cases, they would have a business name on file, but maybe not the website URL.

    Seeing how Bank of America can buy Countrywide and shave off all of their bad debts just got me thinking about loopholes.

    IANAL. IANARS. IANACTD.

    (I am not a lawyer...a rocket scientist...or a crash test dummy. )

    -sfcom


  8. #8
    Best New ABW Member 2007 sfcom's Avatar
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    I guess I should further note that I was not inferring that the original site owner be paid under the table. That could be done via 1099 so that the fed/NY state government could get their personal taxes due. The ownership would be transferred out of state and that would take the NY state sales tax issue out of the picture. The original site owner could work as a contributor or an editor for the new site owner on a contractor basis.

    Of course the much more simple alternative is just move out of state, like I know some are contemplating. But, often it is hard to leave family and friends behind. In either of these scenarios, it doesn't mean that this silly law might not be coming soon to a state near you...

    -sfcom


  9. #9
    Super Dawg Member Phil Kaufman aka AffiliateHound's Avatar
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    Quote Originally Posted by sfcom
    Just wondering how NY tax authorities would ever know that such a sale occured.
    There are plenty of ways they can uncover something like this. Various red flags would be grounds for the tax people to ask for or subpoena records:

    1099s networks/merchants send out - a few years of 1099 income then down to zero;

    State income tax forms could reveal a lot, including the fact that if you sell your profitable affiliate business that would be tax loss, and if you sell it at a profit that is income that must be reported. Also changes in type of income such as from self-employed to salary could be a specific item that they flag.

    As was discussed a while back in another thread, they also may at some time subpoena network records for various reason related to the new law, including to see what affiliates are in NY and the merchants that their commissions derive from. A few years of steady income down to zero would also be a flag for them to investigate the specific affiliate(s).

    I'm sure there are many more.
    Since June 10, 2012 a vegan aarf but still writing the Hound Dawg Sports Blog
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  10. #10
    Super Dawg Member Phil Kaufman aka AffiliateHound's Avatar
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    Quote Originally Posted by sfcom
    I guess I should further note that I was not inferring that the original site owner be paid under the table. That could be done via 1099 so that the fed/NY state government could get their personal taxes due. The ownership would be transferred out of state and that would take the NY state sales tax issue out of the picture. The original site owner could work as a contributor or an editor for the new site owner on a contractor basis.

    Of course the much more simple alternative is just move out of state, like I know some are contemplating. But, often it is hard to leave family and friends behind. In either of these scenarios, it doesn't mean that this silly law might not be coming soon to a state near you...

    -sfcom
    Bottom line is it could work if there were legitimate sales. But, affiliates would be asking for big trouble if such a sale of a profitable business was a sham done to deceive the tax agencies.
    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
    Affiliate Manager Howard Gottlieb's Avatar
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    Quote Originally Posted by AffiliateHound
    State income tax forms could reveal a lot, including the fact that if you sell your profitable affiliate business that would be tax loss, and if you sell it at a profit that is income that must be reported.
    Depending on how you structured your business that's not true. Gain or loss would be based on basis not earnings.

    Quote Originally Posted by AffiliateHound
    As was discussed a while back in another thread, they also may at some time subpoena network records for various reason related to the new law, including to see what affiliates are in NY and the merchants that their commissions derive from. A few years of steady income down to zero would also be a flag for them to investigate the specific affiliate(s).

    I'm sure there are many more.
    People sell their businesses for all types of reasons.

    About 10 years ago we owned a very large manufacturer or aircraft parts and sold it. My income went from quite a bit annually to quite a bit less. If red flags were gonna be raised that would have done it. Income amounts for self employed change often and sometimes dramatically year to year.

    I am not suggesting this as an ideal solution but you have an unbelievable situation in which New York affiliates are more or less out of business. That, in my opinion, calls for out of the box quick thinking.
    I would rather live my life as if there is a God and die
    to find out there isn't, than live my life as if there
    isn't and die to find out there is.

  12. #12
    Outsourced Program Manager Jorge - SHOPiMAR's Avatar
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    I think besides everythting that can be done legaly and while loopholes which I am sure will be found soon, is that NY affiliates, while we work through this and all of us find solutions to make this work, is that ALL affiliates not just NY already be contacting Amazon.com attorneys and finding out how to get in with them and voice concerns and join them and let Amazon know they are not alone in the fight to stop NY from imposing this and join them even if it takes class action from all affiliates in all states. I am sure Amazon attorneys will love it.

    If anyone knows the Amazon lawyers direct and contact info post it on a new forum here and let's call them and have them see we are all opposed to this no matter what state we are located in.

  13. #13
    Super Dawg Member Phil Kaufman aka AffiliateHound's Avatar
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    Quote Originally Posted by visitourmall
    If red flags were gonna be raised that would have done it. Income amounts for self employed change often and sometimes dramatically year to year.
    What I am saying is that NY tax authorities may now, in the context of the new sales tax law, start looking for such flags to lead them to sales where sales taxes should have been collected. It has nothing to do specifically with looking for people under reporting income tax, or anything else - just as leads to finding merchants not collecting sales taxes that they believe might be required under the new law; done for a purpose that did not exist before this law was passed.
    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]

  14. #14
    Affiliate Manager Howard Gottlieb's Avatar
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    Oh, I understand what you are saying.

    I am just saying the transaction would be legit and therefore would withstand scrutiny.
    I would rather live my life as if there is a God and die
    to find out there isn't, than live my life as if there
    isn't and die to find out there is.

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