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  1. #1
    Full Member bobby131313's Avatar
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    Cafe Press Dumps New York
    Wow.

    As you may know, the State of New York recently enacted new legislation that addresses tax registration, collection and remittance, which challenges the CafePress affiliate business model.

    Due to mounting uncertainly over these new laws we will no longer be able to support affiliates residing in the State of New York, effective July 1, 2008. While CafePress has no tax nexus in any states other than California, Nevada and Kentucky we feel it wise to discontinue our affiliate business in New York State at this time.

    Regrettably, our hand was forced into making this difficult business decision, and we openly acknowledge the loss of income this means for our New York affiliate partners. Should circumstances around this law change we will eagerly reconsider this decision.

    Effective July 1, 2008 CafePress affiliate agreements with all New York residents will be terminated. Please let me know if you have any questions.

    Sincerely,

    Steve Root Affiliate Manager CafePress
    sroot@cafepress.com
    650-655-3055
    Wonder if this is going to be another NJ cigarette fiasco. NJ increased thier cigarette tax so much that people either quit or went out of state to buy them. Revenue dropped 15%.

  2. #2
    ABW Founder Haiko de Poel, Jr.'s Avatar
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    Continued Success,

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  3. #3
    Beachy Bill's Avatar
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    Well, the first line of the email that I received goes like this (note that I AM NOT a NY affiliate):
    The following notice was sent to all CafePress Affiliates as a courtesy, but this policy change applies to NY State affiliates only.
    What are they going to do - other than bury their heads in the sand? Just wait until the other 44 states begin jumping on the Internet Sales Tax bandwagon. California already has something in the works - it needs modifying, but you just know they are working on it. I recently heard some rumblings from Pennsylvania, and I'll just bet the Maryland legislature begins work on a similar tax when the state legislature convenes next January.

    I don't sell a whole lot of cafe press stuff - but I do OK with "Zip Code" shirts for two of my community sites. Even though I am not in New York, I do support New York affiliates.

    Goodbye Cafe Press! I'll be looking for another print-on-demand company (with or without an affiliate program) within the next few days. Any recommendations?
    Bill / Marketing Blog @ 12PM - Current project: Resurrecting my "baby" at South Baltimore..
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  4. #4
    ABW Ambassador Joshua's Avatar
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    Steve - If you're reading this, how the hell did you actually get a list of NY affiliates from CJ? It hasn't even been possible to find out how much revenue NY affiliates generate for CJ programs last I checked (which is important for following the tax law, not only expiring affiliates).

  5. #5
    Troll Killer and best Snooper!
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    What are they going to do - other than bury their heads in the sand? Just wait until the other 44 states begin jumping on the Internet Sales Tax bandwagon.
    I don't believe that CP is 100% committed to their affiliate program. If they were quite a few things would be handled differently, not just the NY affiliate situation.

  6. #6
    Super Dawg Member Phil Kaufman aka AffiliateHound's Avatar
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    Quote Originally Posted by Beachy
    California already has something in the works - it needs modifying, but you just know they are working on it.
    Not really true. AB 1956 was introduced in the California Assembly in February, and it has not yet gotten out of committee, nor will it ever. This bill would only impose a tax on internet downloads, and was aimed at music and movie downloads in particular, as well as e-books, software, ringtones, etc., and the power and of California's enterainment industry has seen to it that the bill will go no further. I've tried to keep track, and I do not beleive that any other internet sales tax legislation has been introduced in the California legislature.
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  7. #7
    Beachy Bill's Avatar
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    Quote Originally Posted by AffiliateHound
    Not really true. AB 1956 was introduced in the California Assembly in February, and it has not yet gotten out of committee, nor will it ever. This bill would only impose a tax on internet downloads, and was aimed at music and movie downloads in particular, as well as e-books, software, ringtones, etc., and the power and of California's enterainment industry has seen to it that the bill will go no further. I've tried to keep track, and I do not beleive that any other internet sales tax legislation has been introduced in the California legislature.
    Well that is good news that such legislation has not been introduced into the legislature. But I still gotta believe that someone is working on it.
    Bill / Marketing Blog @ 12PM - Current project: Resurrecting my "baby" at South Baltimore..
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  8. #8
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    I would think the Cafe Press "artist" base would qualify as a nexus. Are they dropping anyone whose designed a coffee mug from NY as well?

  9. #9
    Troll Killer and best Snooper!
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    Are they dropping anyone whose designed a coffee mug from NY as well?
    Not yet, but my trigger finger is twitching.

  10. #10
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    I agree that the New York law is likely to be the first of many by states attempting to enforce tax collection laws.

    I wrote a lengthy post about this topic on June 10 (http://forum.abestweb.com/showthread.php?t=106498) in which I wrote that:

    "The 'real issue' . . . is the probable forced shift to nationwide sales-tax collection by all merchants."

  11. #11
    ABW Ambassador Daniel M. Clark's Avatar
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    I will be surprised if NY-based shopkeepers don't count as a nexus... but then again, maybe they'd be considered 'suppliers' or some such thing. I mean, if I run a business that sells widgets and my "type A widget" comes from a producer in NY, I don't pay NY taxes, right?
    Daniel M. Clark
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  12. #12
    Lite On The Do, Heavy On The Nuts Donuts's Avatar
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    Quote Originally Posted by HecticDMC
    I will be surprised if NY-based shopkeepers don't count as a nexus...
    Ouch, I am thinking like you that they would be, and see this point as hitting much harder at CP's business model. I don't see them ditching NY shop owners. I'm hopeful that would wake up their fighting spirit. After all, how many people within their halls even understand their affiliates' contributions. Maybe a good slap would get them out of their stupor.

  13. #13
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    I posted exactly this to a POD oriented yahoo group last night. Read the tax code again and if any shopkeeper (they get paid commissions) in NYS promotes themselves online it would indeed create a nexus.

    Cafepress AND Zazzle need to review this more closely and their affiliates are the least of their worries.
    Deborah Carney
    TeamLoxly.com BookGoodies.com ABCsPlus.com

  14. #14
    Member NiftyGaloot's Avatar
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    The terms of the agreement a shopkeeper has with Cafepress and the terms an affiliate has with them, aren't the same... And, that might be a factor in how the law is viewed regarding CP.

    IANAL

    Kent

  15. #15
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    Quote Originally Posted by NiftyGaloot
    The terms of the agreement a shopkeeper has with Cafepress and the terms an affiliate has with them, aren't the same... And, that might be a factor in how the law is viewed regarding CP.

    IANAL

    Kent
    The law states anyone that makes a commission. Shopkeepers get paid a commission. Their markup is a commission in all reality.
    Deborah Carney
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  16. #16
    ABW Ambassador Daniel M. Clark's Avatar
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    The law isn't about affiliates, it's about whether anyone connected to the merchant can be defined as a nexus. So, shopkeepers... I'm with Deb, I think they probably count. I'll be surprised if they don't.
    Daniel M. Clark
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  17. #17
    Analytics Dude Kevin's Avatar
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    I've posted it in the other thread, but I was surprised to learn that CP and maybe Zazzle weren't already collecting taxes on NY purchases. I thought for sure the very nature of the artist/delivery method relationship would have created one under the old laws.

    Isn't it, at the end of the day, a New Yorker buying artwork from a New Yorker as black and white as it gets?

    The pay for performance piece is obviously even more damning.
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  18. #18
    Prince of Content Vinny O'Hare's Avatar
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    Doesn't mater to me if they are dropping ny shopkeepers also. My shops will be deleted by the end of the day. Don't want any part of a company not supporting NY affiliates anyway.
    Vinny O'Hare - OPM - Contact Info email: vinny at teamloxly.com ~ 702-582-6742 Twitter

  19. #19
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    These are the marketing channels that NYS has stated in the tax document that constitute establishing a nexus:

    paid search marketing, e-mail marketing, offline marketing, (including flyers and physical newsletters), lead generation, mobile marketing or telemarketing.

    Over the years myself and Cafepress has encouraged shopkeepers to do ALL OF THE ABOVE to promote their shops. I personally know shopkeepers across the country that do all of the above with the exception of telemarketing. Zazzle is recruiting people to their site that do all of the above. All other PODs are also.

    Can Cafepress or Zazzle prove that their shopkeepers don't do this kind of promotion? Do they have numbers to back up that the sales via those methods don't add up to the $10k threashold?

    Again, I go back to, Cafepress, Zazzle and probably all the other PODs need to charge the tax at this time and band together to fight NYS on their definition of nexus. Unless they really do have less than $10k in sales from NYS shopkeepers AND affiliates to NYS residents. I would be shocked if that was the case.

    There is a lot at stake here folks.
    Deborah Carney
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  20. #20
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    nyfalcon brings up another point, although he doesn't realize it. We the shopkeepers are now in the position having essentially "removed NYS affiliates" from "our" affiliate program.

    I am stuggling with that concept right now. I won't manage a client that boots NYS affiliates, but really I am a now "merchant" that has booted them.

    My shops may be closing. This is a sad day for me. I did a podcast with Andrew Wee that will be posted on Friday and I told about how I got my start in affiliate marketing and how Cafepress was a big part of my online marketing and managing career. I talked about what a great company they are. *sigh*

    Going offline to do some thinking. And work on Loxly Gallery.
    Deborah Carney
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  21. #21
    Troll Killer and best Snooper!
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    The timing of the next Cafepress "meet and greet" is pertinent.

    From the CP forum:
    July 26, 2008: New York Meet & Greet

    Save the date New Yorkers (and those nearby). CafePress is heading to the Big Apple next month! So mark your calendar for July 26, 2008 check for updates with more info to come.
    I will try and attend. Any other New Yorkers plan to be there?

  22. #22
    Member Teesed's Avatar
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    "Can Cafepress or Zazzle prove that their shopkeepers don't do this kind of promotion? Do they have numbers to back up that the sales via those methods don't add up to the $10k threashold? "

    Does CP and Zazzle have to prove that they didn't do this, or does NY have to prove that they did?

  23. #23
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    Quote Originally Posted by Teesed
    "Can Cafepress or Zazzle prove that their shopkeepers don't do this kind of promotion? Do they have numbers to back up that the sales via those methods don't add up to the $10k threshold? "

    Does CP and Zazzle have to prove that they didn't do this, or does NY have to prove that they did?
    The company has to challenge the presumption and prove that they didn't.
    Deborah Carney
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  24. #24
    Member Teesed's Avatar
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    Wow. That seems to strike against "innocent until proven guilty", but laws made by the government for the government tend to side with... well, you know. Thanks for the clarification.

    And not to put words in your mouth, but I *think* what you're trying to do here is get CP to just collect the tax for shopkeepers, which then means there's no reason to drop the affiliates.

    On a personal level, I'd hate to see that as I think it would help open the floodgates for other states to say "See? It worked. Let's enact our law as well." I'm still hoping the Amazon/Overstock lawsuit is successful (but see above).

    On a professional level, I'd love to get the NY affiliates back on board sooner rather than later. I've got several tools for CP affiliates and for CJ affiliates with an emphasis on the CafePress features. This just took a chunk of them out of the picture and I'm about to start issuing refunds. Much better to not have to do any of that. Of course, on a personal level I don't want anyone to lose their income either.

    Jim

  25. #25
    ABW Ambassador Daniel M. Clark's Avatar
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    I was telling someone on the phone last night that the PODs are being put in a rather unique situation, compared to your standard merchants. They can drop affiliates, sure... but they can't drop their shopkeepers/artists/contributors if that's how the law gets interpreted. The PODs will either have to start collecting the tax, or they're going to have to fight the law. They can't take a "we'll just drop some people and apologize" stance that other merchants can take.
    Daniel M. Clark
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