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  1. #1
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    Resolution of constitutionality of the current Nexus/Salestax laws
    There'd be nothing more welcome to most affiliates than a determination that these Nexus/SalesTax laws are Unconstitutional because of the Interstate Commerce clause.

    It'd be useful to hear some recap, analysis and educated speculation about this issue from some knowledgeable folks.

    1) What has been done so far in the legal process? By who? The outcomes?

    2) Possible timelines for how this issue will play out. Months? Years? Why so long?

    In a lot of ways, Amazon might not be the best plaintiff to contest this (not that we care, if they do manage to succeed..). Lots of small/medium merchants would be genuinely hit by this nightmare. Is Amazon the only one pursuing legal action, or is there some good effort at organization by others?

  2. #2
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    Here's my take - using the N.C. law as an example
    This proposed N.C. tax violates the Commerce Clause (stemming from the 14th Amendment of the U.S. Constitution) by restricting interstate commerce.

    For purposes in this explanation:

    Out-of-State Retailer refers to an online company that:
    * Has no stores, offices, or employees in N.C.
    * Sells products to N.C. residents.
    * Sponsors advertising links on websites managed by businesses and individuals who live in N.C.

    In-State Retailer refers to an online company that:
    * Has stores, offices, and/or employees in N.C.
    * Sells products to N.C. residents.
    * Is already collecting sales tax and has established procedures for administering it.

    To accommodate the collection and payment of the sales tax to the State of North Carolina, Out-of-State Retailers who have not previously had to collect this tax will encumber additional expenses. This may include modifications to their websites and in-house software. It may require them to hire additional personnel for tracking, record keeping, and other administrative functions needed to fulfill the tax requirement.

    The state of North Carolina (and others) have provisions in their general statutes that allow local governments to impose a sales tax in addition to the state tax. Therefore, Out-of-State Retailers may have to deal with additional time and expense to administer sales tax for local municipalities within the state of North Carolina.

    In-State Retailers will not be faced with these additional burdens.

    Allowing N.C. to impose this tax as written would open up this taxation right to all states and local municipalities, thereby creating even burdens on Out-of-State Retailers.

    Some Out-of-State Retailers may have the resources to administer all these taxes and continue to sponsor links on websites managed by N.C. businesses and residents (and in other states).

    Most Out-of-State Retailers will not have the means to make the changes necessary to comply with the administration of taxes they have not previously had to collect. Their only choice is to drop the sponsored links on websites managed by N.C. businesses and residents (and in other states).

    This means that some Out-of-State Retailers will have the advantage of sponsoring links in N.C. while most will not - simply because of the N.C. sales tax law regarding these links.

  3. #3
    Affiliate Manager red80's Avatar
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    Given the word "affiliate" can be very broad, can someone please confirm if the affiliate tax laws apply to partnerships outside of what we consider "affiliate marketing"? Meaning a deal made outside of and tracked outside of LinkShare, Performics, Share-a-sale, etc. I assume so but would be more comfortable gaining knowledge from someone who knows a little more about this.

    Thank you!

  4. #4
    Affiliate Manager Bradley.Senkovich's Avatar
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    affiliate IS a very broad term. As a merchant I contract affiliates to advertise. affiliates are not employed by the merchant, but more of a private contractee. Didn't this all stem out from when a catalog got mailed to a person out of state to a consumer in yet another state from the merchant. the consumers state tried calling nexus and it was defeated?

    Biz doc, you are absolutely spot on. It would be a terrible burden to have to learn 3000+ district tax laws. Most likely impossible for small businesses, who don't have more then 30 employees.

    This is for Emuf. Yeah, Amazon my not be the best plaintiff in the world to represent us... but it seems to be the name that gets attention of Congress and the media. Funny how no one cares unless big names are involved. I hope by education they learn a bit more before making legislation about nexus taxation.

    I know most would rather abolish all interstate nexus tax. The only other option i could forsee working is the streamlined tax. Europe has their VAT. It works for them. I am sure we could work something similar. It's not going to be easy because there are states that have absurb taxation and then other states that have no sales tax.

    The only solution I can think of is getting involved and educating those who do not understand our problems. Also support organizations like Affiliate Voice and PMA who actually do work to educate others through the proper channels.

    Before i go any further you can check out Share-a-Sale and Commission Junction. they each have a link on their page that links to Internet retail tax updates and you can look it up by state. CJ even has a image with wins/losses/draws available... Do not forget our beloved ABW forums. we have the luxury of facts and opinions (just make sure you sort between them first).

    As far as timelines go... thats an even grayer area then what states are safe and what are not. unless you move to alaska, oregon, delaware or montana (no sales tax)...

    best regards

  5. #5
    ABW Ambassador Daniel M. Clark's Avatar
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    Until these cases are resolved in court, we have no way of knowing the constitutionality of them.

    As for merchants having to learn 3000+ district tax laws... that's not going to happen. Seriously. And I don't recommend letting the legislators in various states hear us talk like that because it sounds like exactly what it is: a cop out. We live in an era of unsurpassed technological achievement. Merchants won't need to learn 3000+ tax laws, they'll simply need to purchase and use the inevitable software that will be written to streamline their tax collection efforts. The software will likely be reasonably priced, and will no doubt be a tax write-off as a standard business expense.

    Online taxes aren't the problem, using affiliates as pawns to circumvent established law is the problem.
    Daniel M. Clark
    Tech Manager
    Greg Hoffman Consulting

  6. #6
    Affiliate Manager Bradley.Senkovich's Avatar
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    It could only be a cop out if this software existed. until then it is unreasonable because we now rely on someone else to tell us what we owe and we take their word for it. Do not expect merchants to just lie down and open their wallets because someone said so. Why do you think you get a chance every year to claim your taxes, exemptions, deductions etc. would you let the Gov just assume it already knows what you owe or get for 2010 taxes? checks and balances... too much power in too few areas.

    The software will not be cheap to produce. you'd have to figure how to make a platform that is compatible with the merchants. Most merchants do not use the same checkout. Hell we created our own platform and sell it to other companies. Integrating another software for taxes isn't like plugging a pixel into the check out screen. It takes time and money to do each. (although if you dev a system that IS as simple as plugging a pixel...) until then, if there is no software/solution, this is moot. Merchant would have to learn those tax laws.

    Daniel, are absolutely right on the abuse of affiliates. they are being used as a scapegoat. I still support NY affiliates. there are other merchats that do the same. that is why we need to support each other and causes such as AV and PMA.

    Do i believe merchants need to pay their taxes? ya.. i do. is there a simple answer. no. not one that will have all sides be happy.

    Heh... isn't there a proverb about if all sides are unhappy... it must be fair..

  7. #7
    ABW Ambassador Daniel M. Clark's Avatar
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    I understand where you're coming from, I honestly do. And I'm not trying to imply that it would be easy to implement an online sales tax solution. But I stand by my statement that we live in an age of unprecedented technological achievement. It might not be easy, but since when is doing only what's easy considered the way to do business? Sometimes, in order to solve complex problems, we need to make hard decisions and tackle solutions that require work, innovation and imagination. The software doesn't exist, but it will.

    States are losing billions every year because dollars are moving online and brick-and-mortars are collecting less sales tax. We, as an industry, brag about that every year when the reports come out (the first part of the sentence, not the second ). We - affiliates, merchants, and everyone else involved in online commerce - pretty much haven't been part of the solution to this point. Coming up with the software necessary to automate the process of collecting state sales taxes is the least of the concerns. Coming up with a fair way to figure out who-gets-charged-what is far more thorny.

    Affiliates need to be left out of it, but we do need online sales taxes.
    Daniel M. Clark
    Tech Manager
    Greg Hoffman Consulting

  8. #8
    Affiliate Manager Bradley.Senkovich's Avatar
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    can i make this quote...

    You are the best kind of right, Sir.

  9. #9
    ABW Ambassador Daniel M. Clark's Avatar
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    Thank you, Bradley
    Daniel M. Clark
    Tech Manager
    Greg Hoffman Consulting

  10. #10
    notary sojac Herb ԿԬ's Avatar
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    Lightbulb
    back in 2008 as a bunch of us met in Albany with a NY-Tax-savvy lawyer, looking for how merchants could live with us and NY State at the same time, I mentioned the Commerce Clause and it went over like a square haircut.

  11. #11
    Affiliate Manager Bradley.Senkovich's Avatar
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    I love how amazon is holding affiliates hostage in connecticut... I don't think i can link it but just google the CT mirror for "amazon threatens to fire state affiliates if Connecticut tries to collect sales tax" if this link doesn't work (http://bit.ly/bysGbm). the article is quite an interesting read though. sickening... but interesting none the less.

    i really do not have respect for anything they do now... affiliates are not negotiating pieces...

  12. #12
    Full Member JCSupSvc's Avatar
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    Quote Originally Posted by Bradley.Senkovich View Post
    I love how amazon is holding affiliates hostage in connecticut... I don't think i can link it but just google the CT mirror for "amazon threatens to fire state affiliates if Connecticut tries to collect sales tax"

    ... affiliates are not negotiating pieces...
    Quote Originally Posted by CT Mirror
    "If Connecticut were to enact RB 5481, Amazon and presumably dozens of other out-of-state retailers would simply sever affiliate advertising relationships with Connecticut residents," Paul Misener, Amazon's vice president for global public policy, wrote in testimony submitted to the Finance, Revenue and Bonding Committee.
    I don't see how Amazon telling the legislature what it will do is "holding affiliates hostage". What they are doing is being upfront with the state and letting them know exactly what the response to the law will be. At least everyone knows going into the vote exactly what the outcome will be. None of them can say afterwards that they didn't know it would cost residents income.
    :rankn-scp John - This is our chosen profession. This is our way. This is what we do.

  13. #13
    ABW Ambassador Daniel M. Clark's Avatar
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    I have to agree with that, actually. I hate what Amazon is doing to affiliates, but one thing that can be said about them is that they've been upfront since the beginning about what actions they'd take. /shrug
    Daniel M. Clark
    Tech Manager
    Greg Hoffman Consulting

  14. #14
    Affiliate Manager Bradley.Senkovich's Avatar
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    i guess... perhaps its the way the article was written.. the "or else" theme always irritates me.

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