Page 1 of 2 12 LastLast
Results 1 to 25 of 38
  1. #1
    Newbie IAmMe's Avatar
    Join Date
    December 22nd, 2006
    Posts
    122
    Any solutions without moving?
    So, I live in NC and about to get hit with the new law that will likely put me out of business.

    I make far too much money on affiliate marketing to simply let my business die. I will move if necessary, but I'd rather not.

    Does anyone know a legal way of setting up a corporate structure that would ultimately allow me to stay in NC?

    If I incorporate outside of NC... Hire someone outside of NC to run my websites.. And simply collect corporate profits as a shareholder in the corporation.. Would that keep me 100% legal?

  2. #2
    Tax Paying Member
    Join Date
    November 14th, 2005
    Location
    Chapel Hill, NC
    Posts
    2,119
    Quote Originally Posted by IAmMe
    I will move if necessary, but I'd rather not.
    Just curious........Where would you go to escape??? It appears to me that most states are getting on the band wagon. When this happens, aren't we all back to square one??

    Yes, I do think that the tax is very unfair and a waste of time and money and a hinderance to business and in the end will gain nothing.
    You must climb this mountain. There is no elevator. ---- Don't stick your finger in the liquid nitrogen.
    Carolina China

  3. #3
    Newbie IAmMe's Avatar
    Join Date
    December 22nd, 2006
    Posts
    122
    Quote Originally Posted by Witzer
    Just curious........Where would you go to escape??? It appears to me that most states are getting on the band wagon. When this happens, aren't we all back to square one??

    Yes, I do think that the tax is very unfair and a waste of time and money and a hinderance to business and in the end will gaing nothing.
    I'm looking into incorporating offshore.. Then hiring a non-US virtual assistant to maintain my websites...

    I'm not looking to avoid paying income taxes.. I just don't want to have to move from NC to maintain my simple, but highly profitable, business.. It's an internet business which means I should leverage the power of the internet to 'move' my business very easily...

  4. #4
    Newbie IAmMe's Avatar
    Join Date
    December 22nd, 2006
    Posts
    122
    Anyone have any insights, links, experience, with incorporating offshore?

  5. #5
    Beachy Bill's Avatar
    Join Date
    November 20th, 2005
    Posts
    8,266
    Quote Originally Posted by Witzer
    Just curious........Where would you go to escape??? It appears to me that most states are getting on the band wagon. When this happens, aren't we all back to square one??

    Yes, I do think that the tax is very unfair and a waste of time and money and a hinderance to business and in the end will gain nothing.
    There are five states withOUT a sales/use tax. In the mid-Atlantic or Northeast US you can choose from Delaware or New Hampshire. The others are Montana, Oregon and Alaska.
    Bill / Marketing Blog @ 12PM - Current project: Resurrecting my "baby" at South Baltimore..
    Cute Personal Checks and Business Checks
    If you are too busy to laugh you are too busy.

  6. #6
    Advocate mellie's Avatar
    Join Date
    January 18th, 2005
    Location
    Here
    Posts
    1,925
    You do not need to move because of an Intenet tax and as other have said where would you move? Moving to any of the 45 states with an excise or sales tax means you would still be vulnerable.

    What you need to do is adjust your business. It is not simple or quick to replace merchants but it can, and has, been done. Your income might drop but it can rebound.

    Take steps now to minimize your losses.
    Melanie
    President - Affiliate Advocacy 2008 ShareaSale Performance Industry Advocate Award, 2009 Affiliate Summit Pinnacle Award - Affiliate Advocate
    Affiliate Advocacy
    NYAffiliateVoice Seery Writing

  7. #7
    Newbie IAmMe's Avatar
    Join Date
    December 22nd, 2006
    Posts
    122
    Mellie,

    Where can I get a list of merchants that will work with NC affiliates?

    Also, I don't understand how moving to a different state doesn't work?!? Sure, that state, in the future, may enact a similar law, but if they don't have that law in place now, wouldn't I be OK?

  8. #8
    Beachy Bill's Avatar
    Join Date
    November 20th, 2005
    Posts
    8,266
    Quote Originally Posted by IAmMe
    Mellie,

    Where can I get a list of merchants that will work with NC affiliates?

    Also, I don't understand how moving to a different state doesn't work?!? Sure, that state, in the future, may enact a similar law, but if they don't have that law in place now, wouldn't I be OK?
    You can be assured that the other state will jump on board. They are all losing $$ from the decline of many B&M stores' tax revenues.

    For example, my former home state (Maryland) tried this year but introduced the bill a bit too late. It died in committee on the last day of this year's legislative session. It WILL be back next year.

    So, if you move to another state with a sales/use tax you will only put off the inevitable. Mellie's advice holds true. There are a lot of merchants who will work with sales-tax-state-affiliates. Those that don't are a bit short-sighted and (just maybe) should be given the boot because of that.

    If it is not convenient to move, as it was for me, my best advice is this: Listen to Mellie - she know's what she is talking about.
    Bill / Marketing Blog @ 12PM - Current project: Resurrecting my "baby" at South Baltimore..
    Cute Personal Checks and Business Checks
    If you are too busy to laugh you are too busy.

  9. #9
    Tax Paying Member
    Join Date
    November 14th, 2005
    Location
    Chapel Hill, NC
    Posts
    2,119
    Where can I get a list of merchants that will work with NC affiliates?
    Has any merchant dropped you because you live in NC???

    Maybe I don't work as broad a spectrum as some affiliates, but I have not been dropped by any merchant because of the tax issue. Maybe I am a minority or just plain lucky.
    You must climb this mountain. There is no elevator. ---- Don't stick your finger in the liquid nitrogen.
    Carolina China

  10. #10
    Newbie
    Join Date
    June 4th, 2009
    Posts
    29
    It is interesting that you mention Oregon. Going after small affiliates and consumers when most corporate jet owners make sure to take delivery of the aircraft in Oregon to avoid the sales tax is beyond me. I am not a tax lawyer but they are not required to pay use tax on a 50 million dollar product. My last company did this to avoid California sales tax. Yet if I move back to Illinois the income from my LLC would be taxed at the gross level, not the net level.

  11. #11
    Believe knight01's Avatar
    Join Date
    August 14th, 2006
    Location
    Dayton, Ohio
    Posts
    1,815
    Quote Originally Posted by crfbusiness
    .. Going after small affiliates and consumers when most corporate jet owners make sure to take delivery of the aircraft in Oregon to avoid the sales tax is beyond me...
    I think Bill may have an interesting story about buying planes and taxes.
    Someday starts today
    Military Discounts

  12. #12
    Beachy Bill's Avatar
    Join Date
    November 20th, 2005
    Posts
    8,266
    Quote Originally Posted by knight01
    I think Bill may have an interesting story about buying planes and taxes.
    Likely 50 different stories because there are 50 different states. Here in Maryland the sales/use tax is the same on products, cars and airplanes; but that is not true in all sales/uses tax states. Some states do not charge a sales tax on planes but assess a personal property tax instead. Some P/P taxes are once and done and others are recurring. I investigated the idea of forming an LLC in DE for my plane, but I would have to "base" it in DE. Then I could have a place to keep it in Maryland, but not keep it here all the time. But things can get weird in different locations. Florida imposes a "use tax" for any plane purchased in the last year(?) and just "lands" at a Florida airport. Lots of strange tax regs and I am not at all familiar with whatever Oregon is doing.

    I do know that six months after I bought my plane and brought it to Maryland I received a bill from the State for 6% of "their" estimated value - which was nearly twice what I paid. They did take "my" value because I enclosed documentation of the purchase price and remitted my calculated tax. But, that was it, once and done. Now, if I can only keep away from airplane dealers ("unfortunately" there are two withing a half hour flying time of my home airport) with some nice shiny, new ...

    Bill / Marketing Blog @ 12PM - Current project: Resurrecting my "baby" at South Baltimore..
    Cute Personal Checks and Business Checks
    If you are too busy to laugh you are too busy.

  13. #13
    ABW Ambassador
    Join Date
    January 18th, 2005
    Posts
    673
    I also live in NC and have gotten about 8 termination letters in the past 2 days.

    I am thinking of hiring a Registered Agent and Virtual Office in Wyoming. Yearly costs would be about $700 and some services offer an VOIP phone number you can connect to your own internet connection and have a Wyoming phone number. A registered agent allows your official govt documents and requests to be handled by the agent (say, in wyoming) and a virtual office gives you an address and phone number. mail is simply forwarded to you weekly.

    Wyoming not only has not corporate income tax but they have a continuance procedure that allows you to transfer a corporation from another state.

    Alternatively, you could simply purchase an aged company (that is already set up) for less than $1000 in the state of your choice, then find a registered agent and virtual office of course. Often the same people that sell aged companies sell registered agent services and virtual office services.


    Estimated Costs:
    Virtual Office: $500 / year
    Registered Agent: $150-$200 / year

    New incorporation or continuance, $300-$500 one time.

    Hell, I pay more corporate state taxes now. It might be a good idea even if NC dumps the bill....

    -- Wow I have not posted in a LONG time....

  14. #14
    ABW Ambassador ladidah's Avatar
    Join Date
    October 15th, 2007
    Location
    MA
    Posts
    1,888
    chrisk, welcome back!

    You have certainly thoroughly done your research. Some interesting ideas for sure.

    I don't have a problem doing this extra work if this is legal and OK. If not, then it's a matter of time they will catch up with you. Also, I think eventually all the states will start charging tax, then where would you go?

    Someone has also mentioned going offshore. That is an interesting thought. You will have to incorporate on some island and some have offices set up just for that. I would consult an international tax lawyer since the tax laws are complicated and always changing.

  15. #15
    .
    Join Date
    January 18th, 2005
    Posts
    2,973
    I've said this a dozen times before on ABW, but here we go again:

    No, you cannot remain in an "Amazon Tax" state and continue your advertising relationships with merchants who have decided not to collect sales tax and who have decided to terminate their relationships with in-state publishers.

    No, you cannot legally use a mail-drop address in another state to trick the merchant.

    No, incorporating or registering in another state (or offshore) will not solve this problem.

    No, there is no benefit (for "Amazon Tax" purposes) in "hiring a Registered Agent and Virtual Office in Wyoming."

    The only legitimate way for web publishers to avoid the impact of the "Amazon Tax" is to physically move your household and your business completely out of the "Amazon Tax" state(s). As noted, moving to a place which has a sales tax but has not yet enacted an "Amazon Tax" isn't a wise strategy, because other states are likely to jump on the bandwagon. Moving out of the U.S. might avoid the "Amazon Tax" but many merchants don't accept non-US affiliates.

    There are five U.S. states which don't impose sales taxes: Alaska, Delaware, Montana, New Hampshire, and Oregon.

    Do not play "entity games" or "address games" in order to try to avoid the impact of a state's "Amazon Tax," while remaining a resident of that state.

    The original suggestion here was "If I incorporate outside of NC... Hire someone outside of NC to run my websites.. And simply collect corporate profits as a shareholder in the corporation..." and I responded to this same idea in another discussion thread: in theory, it might work, but neither your merchants nor your state's tax agency are likely to believe you.

  16. Thanks From:

  17. #16
    ABW Ambassador
    Join Date
    January 18th, 2005
    Posts
    673
    Exclamation
    Most fortune 500 companies are incorporated in Delaware. That does not mean that their primary business or even their HQ is located there.

    When you incorporate in a state, it means that you file articles of incorporation in that state. You must have an address in that state and you must have someone at that address that is listed in your articles of incorporation at that address. Further, a phone number is often needed in that state with someone answering it. The address is used by various govt entities to send mail to. A registered agent is someone that you hire to fulfill these duties. They man your business in another state.

    If you incorporate in a particular state and then want to do business in another state then you are supposed to register as a foreign corporation. Since your business is virtual, simply don't do this - leave it in the other state.

    Your affiliate checks will be sent to the registered agent that will then forward them to you. You will also need a bank account with that address but that is no real issue either in the world of ATM's, direct deposit and national banks. There is no 'tricking' affiliate managers, there's nobody that needs to 'believe' you. Your business address IS in another state and your corporation is governed by the laws in that state.

    I will be talking with a lawyer soon about some of the possible issues. Do a search for incorporating in Delaware - you will see loads of info.

    As for picking the right state to avoid these taxes in the future? Pick a state that is doing well financially and has a libertarian or anti-tax tradition. Often you can see this by looking at the corporate income tax amounts. DO NOT be tricked by Florida, they are in serious financial trouble and are likely to enact all kinds of new taxes.

    Offshore: You have LOADS of other problems with offshore businesses. Many of the offshore loophones are being shut down. Expect very regular audits.

  18. #17
    Newbie IAmMe's Avatar
    Join Date
    December 22nd, 2006
    Posts
    122
    Chrisk, thanks for your inputs.

    People on this board continue to say that being a shareholder of an out of state corporation will not work. But I don't ever hear WHY..

    Since I live in NC, if I go buy a share of Overstock.com (OSTK), does that mean Overstock must start collecting sales tax in NC? I don't think so..

    Now that I'm a shareholder of Overstock.com, I want to start a website to encourage everyone to buy from them so the value of my stock will increase. If I create a website to encourage people to buy Overstock items (but I don't earn an affiliate commission) does Overstock need to start collecting sales tax in NC? Again, I don't think so...

    Can Overstock.com tell me, as a resident of NC, that I can't buy their common stock? Nope...

    Again I ask, why would being a mere shareholder, of an out of state company, cause nexxus? Assuming that as a shareholder, I have no active involvement with the website in question...
    Last edited by IAmMe; July 1st, 2009 at 09:24 AM. Reason: Add Overstock comment..

  19. #18
    ABW Ambassador
    Join Date
    January 18th, 2005
    Posts
    673
    Mark states in other threads that it is fraud to reside in one state but have your business in another state.

    This may be true and may be the primary issue. It is the only point I see that could be a problem. We simply need a lawyer that specializes in this sort of thing to have a look. Also, I will check with my accountant.

    Obviously this probably will not work well with an S corporation. It will probably need to be an LLC or C corp.

    Fraud with a merchant is no problem. They are doing business with your company, not you. That is the POINT of a corporation. State and federal laws on the subject are the ones in question but I see business all over the place that specialize in setting things like this up. Just search for 'virtual office'.

    Again, you would need a physical address (not po box) and someone in that state on your articles of incorporation.

  20. #19
    Member
    Join Date
    June 17th, 2009
    Posts
    114
    The NC legislation refers to a state "resident"...

    "A retailer is presumed to be soliciting or transacting business by an independent contractor, agent, or other representative if the retailer enters into an agreement with a resident of this State"
    It is my understanding that if you move an account out of state, Amazon and other merchants will go to great lengths to ensure that you are not still a resident of NC. So I asked Amazon about this and received this response...

    "The payee address on your account should reflect your primary residence or place of business. If this information is incorrect, please make the appropriate changes online through Associates Central. You can log in to Associates Central by following the below URL:

    https://affiliate-program.amazon.com/

    I am sorry but I cannot tell you how long this process will take.

    However, we want to be sure you are aware that you may be asked to provide proof of residency at your new address. If so, we will contact you with instructions on what documentation to provide and the submission process."
    I don't know what to make of them saying "your primary residence or place of business" and then saying "you may be asked to provide proof of residency."

    I'll ask for clarification.

  21. #20
    .
    Join Date
    January 18th, 2005
    Posts
    2,973
    > "Mark states in other threads that it is fraud to reside in one state but have your business in another state." <

    That's not correct. The issue is that a person or a business can "reside" in more than one state. Every business "resides" in EVERY STATE where its employees work (an over-simplification, but pretty close). If the owner/manager of a business lives and performs work for the business in North Carolina, but chooses to incorporate the business in South Carolina or Delaware, the business is a "resident" of BOTH states.

    > "People on this board continue to say that being a shareholder of an out of state corporation will not work. But I don't ever hear WHY.." <

    Read again. It should work; the presence of a "mere shareholder" does not create residency for a business. But your proposal won't work.

    Your proposal was that you incorporate in another state, and hire someone in that state to operate the business; after you initially train that person, you would have no further role in the business other than being a shareholder.

    If the state (and your merchants) believe you, then this ought to work, once you've extricated yourself from the business.

    But let's face it, nobody is going to believe you: we all believe that this is just a "ploy" and that you will continue to do work for the business from your home in North Carolina. Even in the incredibly unlikely event that you choose not to be an officer or director of the company, if you are the largest shareholder, nobody is going to believe that you are suddenly a passive participant in this particular business.

    If you really, truly do want to remove yourself from all business activity, and shift the complete management and operation of the business to someone else, then maybe it would work.

    Your goal is to continue to reside in North Carolina, but own a corporation (or LLC or other entity) that is not considered a resident of North Carolina. Of course it's possible you can achieve this goal, but it's also possible that North Carolina's tax agency won't believe you or your merchant.

    Remember, the state tax agency's goal is to maximize tax collections and catch "cheaters." If they think you're not being honest, they can make your life hell.

    Probably the most important thing to consider is that if your efforts to "avoid residency" fail, it's the merchant (not you) who will suffer the consequences: the merchant will owe sales tax on all sales to North Carolina residents, not just the sales that you or other in-state publishers referred to the merchant. As a result, the merchant is likely to be very "risk-averse," and they won't want to gamble their business on your ability to "follow the rules." As such, merchants should probably not simply accept all address-change notices from web publishers.

    As I mentioned in another thread, if many states enact this legislation, many merchants should seriously consider terminating their entire affiliate program, to avoid the risk that one errant publisher might trigger tax-collection duties in a state.

    > "Your affiliate checks will be sent to the registered agent that will then forward them to you. You will also need a bank account with that address but that is no real issue either in the world of ATM's, direct deposit and national banks. There is no 'tricking' affiliate managers, there's nobody that needs to 'believe' you. Your business address IS in another state and your corporation is governed by the laws in that state." <

    The question is not "where is the company's mailing address?" The question is, "where does the company reside?" In this example, your incorporation and use of a registered agent in another state creates "residency" in that state. But you are continuing to operate your business in another state, where your company also "resides."

    You are describing a "trick" here -- you're trying to conceal the fact that your business continues to be a resident of a state where the business' employees perform work. You and your company will both need to file income-tax returns in your state, and your company will also need to file income-tax returns in the state where you incorporate.

    Merchants and Networks: If you're reading this, then you're on notice that a number of web publishers are considering the use of "address tricks" and "entity tricks" to conceal their residency in states where you don't allow participation in your program. As a result, you should include language in your program Agreement, requiring all web publishers to fully disclose which states they "reside" in, including all states where any work is performed in addition to states where the business is incorporated or registered to do business. (It might also be prudent to demand disclosure of any property ownership in other states, and non-passive investments in businesses in other states.) Merchants (and networks) should also include specific language explaining the web publishers' obligations (damages) in the event that the publisher's deceptive conduct results in legal liability by the merchant to a state tax agency.

    This is not legal advice. Don't gamble your business and your livelihood on this; consult with an attorney.
    Last edited by markwelch; July 1st, 2009 at 11:12 AM.

  22. #21
    Newbie IAmMe's Avatar
    Join Date
    December 22nd, 2006
    Posts
    122
    Quote Originally Posted by markwelch
    >Merchants and Networks: If you're reading this, then you're on notice that a number of web publishers are considering the use of "address tricks" and "entity tricks" to conceal their residency in states where you don't allow participation in your program.
    Mark, noone is suggesting "address tricks" or "entity tricks". What we are trying to determine is whether or not certain LEGAL business structures would allow a web publisher to be a resident of an 'Amazon Tax' state, and yet not cause nexxus.

    Everyone seems to agree that even though I am a shareholder of Overstock, Overstock does not need to charge sales tax in NC. It doesn't matter if I own 1%, 10%, or 99% of the common stock of Overstock. I am just a shareholder.

  23. #22
    ABW Ambassador
    Join Date
    January 18th, 2005
    Posts
    673
    Thanks for all the clarifications mark.

    Amazon may be an issue with them wanting residency documentation. If you are incorporated, it's possible they may take your articles of incorporation if you have the proper address and phone number. I am betting that other affiliate managers and affiliate programs will not be as proactive as Amazon.com.

    If you do something like this, be sure to update your DNS records, change your About Us page, etc. Be sure EVERY reference to your business is in the other state. Make it VERY official.

  24. #23
    Newbie IAmMe's Avatar
    Join Date
    December 22nd, 2006
    Posts
    122
    Mark, I agree with you that someone can not live in NC and ACTIVELY participate in affiliate marketing, no matter the business structure, without it creating nexxus.

    But, my situation is different...

    I no longer want to ACTIVELY participate in affiliate marketing. I simply want to become a shareholder of an out of state corporation that does affiliate marketing. The corporation has one employee, located in Delaware. This employee handles 100% of all necessary duties to maintain the affiliate marketing website.

    The only thing I do is collect a dividend check, from the corporation, if the corporation turns a profit..

    Mark, I am JUST A SHAREHOLDER of this corporation. Would this cause nexxus? And, if you believe it does, why would this scenario cause nexxus, but no nexxus is created if I buy a share of Overstock.com?

  25. #24
    .
    Join Date
    January 18th, 2005
    Posts
    2,973
    > "...why would this scenario cause nexus ... ?" <

    As I explained above, the issue is whether the state and the merchant believe you. If the merchant doesn't believe you (or is worried about the risk of a state challenge), they won't allow you to participate. If the state doesn't believe you, they can make life hell for you AND the merchant. How much do you enjoy being audited?

    Quote Originally Posted by markwelch
    > "Your proposal was that you incorporate in another state, and hire someone in that state to operate the business; after you initially train that person, you would have no further role in the business other than being a shareholder.

    If the state (and your merchants) believe you, then this ought to work, once you've extricated yourself from the business.

    But let's face it, nobody is going to believe you: we all believe that this is just a "ploy" and that you will continue to do work for the business from your home in North Carolina. Even in the incredibly unlikely event that you choose not to be an officer or director of the company, if you are the largest shareholder, nobody is going to believe that you are suddenly a passive shareholder in this particular business.

    If you really, truly do want to remove yourself from all business activity, and shift the complete management and operation of the business to someone else, then maybe it would work.
    " <
    How much do you enjoy being audited?

  26. #25
    Newbie IAmMe's Avatar
    Join Date
    December 22nd, 2006
    Posts
    122
    Mark, so, if the facts I mention above are 100% true, you agree with me that nexus would not exist?

    Being audited wouldn't be fun, but I wouldn't be worried at all if it happened.

+ Reply to Thread
Page 1 of 2 12 LastLast

Similar Threads

  1. P.T. Solutions gone again?
    By Rexanne in forum ShareASale - SAS
    Replies: 4
    Last Post: August 22nd, 2005, 02:20 AM

Posting Permissions

  • You may not post new threads
  • You may not post replies
  • You may not post attachments
  • You may not edit your posts
  •