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April 1st, 2009, 12:02 AM #1
- Join Date
- June 15th, 2005
I'm not a lawyer..and I don't understand the law...but has anyone tried incorporating in another state? ie: say you live in NY, you incorporate in Delaware....would this help avoid the sales tax?
i'm also thinking what if you have a family member that lives in an "amazon tax" free state and you rent a room from them...can you then at least use that address as your business residence? i have a grandmother in puerto rico that will rent me a closet for $50 a month
i'm not saying these are ways to go. i'm going to consult a tax attorney..but if anyone has a solution (for the time being) other then moving, please post it here.
April 1st, 2009, 06:49 AM #2
after you consult with your tax attorney, post the answer here. but I'll bet if you don't physically move it will be considered fraud. and why move if within a few years the sales tax goes national?
April 1st, 2009, 12:11 PM #3
April 1st, 2009, 02:10 PM #4
- Join Date
- January 18th, 2005
I'm not sure why people keep asking this same question, over and over, in different threads under the Affiliate Tax discussion. I really don't think the people asking these questions actually intend to do so -- I think the real purpose is to point out how easy it might be to evade the "Amazon Tax" laws, or the consequences of those laws, if someone wanted to do so. Perhaps the goal is to persuade legislators that since enforcement of the law is difficult or implausible, they should not enact the law in the first place.
(1) It does not matter where you incorporate your business. What matters is where you engage in your business activities. You can easily be a "resident" of more than one state, for purposes of certain laws. A corporation is a resident of every state where it has offices, employees, or agents. (Note that the concept of "residency" is not uniform -- for some purposes, the rules may be quite different, and concepts like "jurisdiction" and "nexus" bring incredible complexity and nuance.)
(2) Any kind of "trickery" or deception will properly be viewed as fraud by merchants, who can probably refuse to pay you as a result. (The merchant might also be able to sue you to collect compliance costs and legal fees associated with any "gotcha" sales tax if you turn out to be the land-mine that caused the merchant to be required to collect tax.)
(3) In addition, if you use an address in another state in order to avoid paying taxes yourself (for example, pretending to live at an address in a low-income-tax state, but actually residing in another state), then you can be criminally prosecuted for tax fraud.
Compliance with the law should never be based on "the likelihood of getting caught." Don't rely on trickery or games.
Of course, lots of individuals and companies will probably not obey these laws. Some folks may do so openly, insisting that they will not comply with a state law that violates the U.S. Constitution. Many others will ignore the law, just as millions of Californians currently ignore the "use tax" law.
Yes, this proves that the law is not very reasonable, and it's especially unfair because laws like this create an "honesty tax" -- people who are honest will pay these taxes, but the law really encourages people to be dishonest in order to avoid the tax (in the absence of an increadibly expensive and unpopular RIAA-style punitive-enforcement campaign).
Based on our experience after the New York "Amazon Tax" law was enacted, several hundred companies will take affirmative steps (such as terminating affiliates, or adding the complex certification/paperwork process used by some merchants in response to the New York law) to prevent the law from applying to them.
April 1st, 2009, 03:38 PM #5
- Join Date
- June 15th, 2005
sorry guys. i looked all over for this information. couldn't seem to find it. thanks for the details mark.
March 1st, 2012, 12:58 PM #6
- Join Date
- January 5th, 2009
I agree with most of what you said however. If you are an individual and not a business, how would an affiliate ever know anything about your New York address? Cant I just put a NJ address of a relative on the W9, and have the affiliate direct deposit my earnings to my NY bank, or have the checks sent to NJ and have my relative mail them to me?
At the end of the year, I will still get a w2 from them and pay my NYS income taxes (since this is where i live).
If this isnt legit enough, couldnt I just rent a very cheap office in NJ. collect the checks there and use that address? whose to know or care how often i visit this office?
sorry if this is out of date, but I never was affected with this Tax issue until now. A new affiliate i want to add is not accepting NY affiliates. So I am trying to figure out a solution.
Last edited by moneymm; March 1st, 2012 at 12:59 PM. Reason: typo
March 1st, 2012, 03:18 PM #7
- Join Date
- March 1st, 2012
I wouldn't take any one's advice except a tax attorney in your own state of residence. You might think you have figured out a clever solution only to find it catches up with you eventually. I'm all for creative solutions but when it comes to taxes, creativity can cost you and not in a small way either.
March 8th, 2012, 12:27 PM #8
I'm nopt going to try to tell you how it ought to be, how we all wish it could be or tell you a pack of lies.
I AM going to tell you what many people in Amazon banned states are doing to deal with the issue.
First, let's deal with the Nexus thing. A corporation located in one state, let us say, located in The State of Sunflower which contracts with a person in another state (Let's call that state "Bolshevia") to perform work through that corporation's website is not establishing nexus in Bolshevia as long as the webhosting is not located in Bolshevia and the Amazon payments are not sent to The State of Bolshevia.
Further, since The State of Sunflower already collects sales tax on Amazon sales because Amazon already has physical faciliaties there, affiliates in The State of Sunflower are not in any danger of being shut off and will not be.
If a corporation in the State of Sunflower signs up with a sponsor like Amazon, the *corporation* is the affiliate, NOT whoever is pushing the buttons, regardless of where the Button Pusher is located.
If the Button Pusher is not an employee but rather only a *contractor* to the corporation, nexus in the State of Bolshevia is NOT established.
Rmember *this* and *this* is what people just don't get:
The *corporation* is the affiliate, NOT the individual pushing the buttons, regardless of where the Button Pusher is located!
If the affiliate (The Corporation) is not located in Bolshevia, it will not be subject to tax liabilities in that wretched land.
The Button Pusher(Located in Bolshevia) who is paid, not by the Sponsor (in this case, Amazon) but rather by the corporation (Located in The State of Sunflower) will indeed owe personal income tax to The State of Bolshevia but NOT sales tax!
Some people I know of even use a VPS located in yet a third state or even offshore to make doubly certain that nexus is not established in their State of Bolshevia.
Is all this legal?
Is it ethical?
As far a nexus goes, some states are trying to base nexus on the number of peopole solicited within that state.
By that logic, if a company takes out an ad in National Geographic, as soon as 20 copies of the mag are sold, nexus would be established and tax would apply. This attempt obviously is going to fall flat down the road but that speculation is not what this post is about.
Does Amazon accept affiliates from The State of Sunflower?
It sure does!
I know a guy who sets up corporations for internet marketers in the State of Sunflower for which no SSN is required, no insurance, no business license and even gets the EIN for the corporation.
The affiliates in The Particular State of Bolshevia then simply sign up with Amazon (Using a different URL than their original, of course!), get approved and proceed to Rock'n Roll In The USA!
They use the corporate info to open a bank account at one of the Mega-Banks which has branches everyplace and have their payments sent there. If they are close by to The State of Sunflower, they just drive over and open an account within that state, get online banking and an ATM card and they are ready to go!
I know for a fact that Amazon will accept corporations from The State of Sunflower because I have a corporation there and my Amazon account is in the name of that corporation, using the corporate EIN and banking info.
I know for a fact that...well.....a fairly large number of affiliates from The States of Bolshevia are using this perfect legal and ethical method to stay in business.
It is tough out there, getting tougher and if Internet Marketers are going to stay in business, they are going to have to become much more business savvy, learn to use the law to their advantage, keep up on changes and stay safe and smart.
April 8th, 2012, 11:41 PM #9
Got a notice that there was a response to this thread which was an obvious autoposter thingy.
When I went into the thread, it was not there at all!
Salutations to the ADMINS and MODS for keeping an eye on things!
April 8th, 2012, 11:45 PM #10
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