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April 1st, 2009, 03:47 PM #1A big problem with this AB 178. internet retailers could lose 40% of there revenue?
Maybe I'm going to far but anyone know how much the sales tax would be? cause if internet retailers already pay anywhere from 5-20%+ commissions on sales for affiliates. Even if this sales tax was 8-20%, this would mean that internet retailers who have affiliate programs could lose up to 40% of there revenue a year (for those who pay 20-30% commissions).
As there was a video from overstock.com on fox's site about this issue, there new york affiliates did 60 million in sales. which means since they already pay 5-10% commissions they would owe affiliates 3-6 million, as well as the sales tax which would be around 3-6 million also probably, which means 6-12 million of there 60 million would be spent, and what about the money they use for promoting and advertising, that would take out another 10-20 percent in new york which would be anywhere from 12-24 million all together which is almost 40% of there revenue gone.
based on these calculations, if I did this correctly, this bill could cause 40% loss of revenue of merchants who have affiliate programs. (which would most likely cause us affiliates to go out of business, in the states where this new law gets passed too.
April 1st, 2009, 03:56 PM #2
A vast majority of sites will have the consumer pay the sales tax. There are few that I know of now, that eat their local sales tax. Correct me if I'm wrong.KK
April 1st, 2009, 04:02 PM #3
This is totally misguided.
CUSTOMERS pay the tax. Period.
fyi - Today, CA sales tax went up 1%; rates vary by county, but LA County is now 9.25%.
April 2nd, 2009, 06:02 PM #4
I think the issue with the NY tax was that it was retroactive, so the online retailer would actually owe backtaxes and they presumeably wouldn't be able to retroactively collect from customers.
April 2nd, 2009, 06:11 PM #5Originally Posted by jtoskey
Either way, that was only an issue for one quarter and not an on-going situation.
p.s. nice avatar
April 3rd, 2009, 05:25 AM #6
Probably more accurate to say that there was a grace or an amnesty period. Just semantics. The NYS law went into effect 4/23; if a merchant registered by 6/1 they did not have to remit sales tax they should have collected 4/23 -5/31 (unless of course they collected it) and were not liable for penalties.
If merchant did not register, had a nexus, did not collect/remit sales tax penalties apply back to 4/23.
Merchants who did not register by 6/1 and had a nexus between 4/23-5/31 actually still have nexus and could be liable for taxes.
These amendments went into effect April 23, 2008. However, a business covered by the presumption that registered by June 1, 2008, could avoid the assessment of any prior sales tax owed, including penalty and interest, if certain conditions were met.
Before taking action removing affiliates might be a good idea to consult an sales tax attorney to make sure it is of any real benefit (in terms of avoiding a nexus)
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