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August 26th, 2010, 08:10 PM #1ALERT: Affiliate Tax Alive in California
The Affiliate Nexus Tax (aka Amazon tax or Ad tax) is being seriously considered by the California legislature in a new bill, AB 1625, just published Monday 8/23/10. In a nutshell, if this law passes, it will lead hundreds of merchants to terminate their California affiliates – overnight. We know this for a fact because they terminated affiliates in NY, NC and RI when similar laws were passed there.
You can learn more on the PMA site, there’s even a video: http://www.performancemarketingassoc...y/legislation/
The ONLY WAY we can beat this is for legislators to hear directly from online marketers who will impacted by this. We need your help in emailing your personal state senator. We need these senators to receive a large volume of emails opposing AB 1625. They are going to vote on this any day, so please take a few minutes TODAY to help them understand the impact this will have. Sending this 1 email will take you just a few minutes and make a HUGE difference – it’s the only way we can beat this.
Step 1: Find your State Senator here: http://www.legislature.ca.gov/port-zipsearch.html
Step 2: His/Her email address is as follows: firstname.lastname@example.org
Step 3: Use the sample email below (or there are tips if you want to create your own).
In less than 5 minute’s time, you’ll make a HUGE impact on fighting this legislation.
Subject: I oppose AB 1625 – Section 1
Dear Senator [Insert Last Name],
I strongly oppose AB 1625 – Section 1, the affiliate nexus tax. If this law passes, the state will NOT gain additional taxes, and my small business income will be devastated in the process.
My income is earned by selling advertising on web pages. [recommended: insert a few words describing your websites, and why affiliate marketing is important to you – keep it simple!]
If AB 1625 – Section 1 passes, out-of-state retailers for whom I advertise will terminate our partnerships. When similar laws were passed in New York, North Carolina and Rhode Island, over 200 retailers terminated their affiliate programs, and many have promised to do the same in California. When these retailers terminate my partnership, my income will be devastated.
This law would be futile: California will not collect any new sales taxes, and my business will be destroyed in the process.
I respectfully request you reject AB 1625 – Section 1. It will not earn any additional tax revenue for California, and it will damage my business in the process.
Key points for a custom email:
Use these points if you want to create your own email or call your legislator. There are a million reasons why this law is a bad idea, but we have found these points are the most meaningful to lawmakers.
Be extremely polite and respectful. Do not express your frustration over the law or the process.
The following points address what we feel they need to understand:
* You oppose the bill because it doesn’t help California's budget, and it will devastate your income.
* You have a website and you earn an income by providing ads on your website.
* You advertise, you do not sell. You have nothing to do with any transaction. You don’t take money. You don’t deliver a product. You probably don’t know who the customer is. You advertise and refer traffic to advertisers, that’s it.
* Describe a little about your business or web sites (in simplest terms) and why affiliate marketing is important to you. If passed, your out-of-state retailers will most likely terminate, like they did in New York, North Carolina and Rhode Island. And your income will be devastated.
Thank you for helping in this very critical fight!
Executive Director | Performance Marketing Association
o: 805.445.9700 (PST)
August 26th, 2010, 08:41 PM #2
Thanks for posting Rebecca. Emails sent. Are there any other key members of the assembly we need to target? I sent to 16 or 17 democrats I had on my list from February.Your Ad Here.
August 26th, 2010, 09:19 PM #3
We're focusing on the Senate right now, which is where the bill is, and if it doesn't pass with a 2/3 vote there, it will likely die. They appear to make up rules as they go, but this is how I understand the state of things right now:
- The bill has technically already passed out of the Assembly.
- If the Senate can't get 2/3 majority, the bill will die (for this year....then probably come back again next year)
- Or the Senate could amend the bill, at which point the amendment goes back to the Assembly for a vote
- Or the Senate could pass the bill, at which point it gets rolled up into the budget and then the Governor has to sign it.
- Last year the Governor vetoed it but we can't count on it completely in case it gets traded in some back room deal.
In terms of line up, in the Senate there are 25 democrats and 15 republicans. This bill needs 27 votes to pass. It is generally assumed the dems will all vote yes and the reps will all vote no. But word this week is some republicans are weakening. This doesn't have to do with logic, it has to do with some other dealings and tradings, pure politics.
We think the real risk is an amendment by the Senate, sending it back to the Assembly. And if we can kill it now in the Senate, it's done for the year.
If you are able to send out more emails, it would be AWESOME!!! Here are the swing senators we need to convince. You can create their emails the same way: "email@example.com"
August 27th, 2010, 12:11 AM #4
Ok emailed all those on the list. I also attached Overstock's Feb. 19th letter stating they will terminate affiliates if the ad tax passes.Your Ad Here.
August 27th, 2010, 08:43 AM #5
It seems really obvious to me that this will be a huge revenue drain on the California economy, due to the huge number of high traffic websites in California that make money from affiliate relationships. GAN/Google alone would be a huge revenue blow, Google has to be the ultimate affiliate now, their revenue loss from terminated relationships would be huge.
Does California not understand the tax contributions made by Silicon Valley? Why would the jeopardize this revenue stream by forcing companies to move out-of-state (or form subsidiaries out of state).Merchants, any data you provide to Google Shopping should also be in your affiliate network datafeed. More data means more sales!
August 27th, 2010, 10:30 AM #6
Ah, logic versus politics - it can make a person insane! I was just up in Sacramento with 2 affiliates on Wednesday, we met with a senator's policy adviser and we spent a lot of time explaining what affiliates do and the economics. The economics are pretty simple: there are 25,000 affiliates in CA, who made $1.6 billion in 2009 and paid $124 million in state income tax (plus property, employment, business taxes, etc). The bill analysts predicted the state would make $100 million if they could get Amazon and others to start collecting sales tax.
But the flaw is really obvious: if an affiliate program is the hook the state is trying to use to get retailers to collect sales tax, then retailers terminate affiliates so they don't have to collect. The retailers are still in control of their businesses, they don't collect sales tax, the state gets a big fat $0 in new sales tax revenue, and affiliates are put out of business (or move), so the state's net income goes down.
And do you know what the aide said? She said she understood the economics but as long as the bill says it will make $100 million, they need that number to balance the budget so the legislative session will close. Even though it's a false number. Argh!!!
But you know what? We run into similar political maneuvers in every state (I think we've fought this in over 12 so far), and we've still defeated it every time. Not because our logical answers to their political statements make any impact. It's because affiliates get involved and put faces and names behind the small businesses they're about to devastate. "I'm a small business and if you pass this law, I will lose my income, I'll have to lay off people or I'll have to move. And the state will still end up with $0."
No one, no matter what party or political climate, wants to hurt a small successful business in their state. That's our secret weapon (well, not so secret).
August 27th, 2010, 11:34 AM #7
Another way you can help - comment on this op-ed. It's in Capitol Weekly, which is a paper targeting Sacramento legislators. I recommend the same tactic as the email: I'm an affiliate and I'll get devastated...
August 27th, 2010, 03:12 PM #8
August 27th, 2010, 03:28 PM #9
August 30th, 2010, 06:01 PM #10
Just got a couple emails from Overstock, I guess the senate is voting tomorrow on this thing. Hope they read our emails.Your Ad Here.
August 30th, 2010, 07:17 PM #11
Can you post a copy of the emails on this thread? I am in Sacramento today, and it boggled my mind but one legislator told me he didn't believe merchants would terminate. I'm afraid his perspective is "let's pass it and see what happens." The Overstock letter would help immensely.
August 30th, 2010, 07:46 PM #12
Letter from Overstock.
August 30, 2010
Overstock.com values your advertising efforts, and hopes to be in a position to continue our business connection for years to come. However, as we notified you in February, there is a measure under consideration in California, likely to be voted on tomorrow, which, if it passes, will likely result in the termination of our business connection. We are urging you to contact your Senator in the California Legislature immediately to oppose the affiliate nexus tax.
By tomorrow the California Senate will have to consider the new tax, which appeared in the Assembly's final budget proposal as AB 1625 (Section 1), or it will die for this year. In order to pass, AB 1625 needs a 2/3 majority vote. Its chances of passage are unclear; consequently, your efforts in opposition will be highly effective.
Last year the Governor vetoed a similar measure, and we are told that the Governor has not altered his position on this new tax; however, despite this, we are concerned about last minute political compromises.
You will find information on how to contact your State Senator at this location on the Performance Marketing Association's website.
Please waste no time in contacting your Senator today to oppose the affiliate nexus tax.
Jonathan E. Johnson III
President Overstock.com, Inc.Your Ad Here.
August 30th, 2010, 07:48 PM #13
August 31st, 2010, 03:06 AM #14
Emails sent. Also sent a few to my "local" senators the other day.Peace,
Loving Everyone's Child Creates Magic
August 31st, 2010, 04:26 PM #15
I put this update on our site today. So many politics! But I can tell you this - the Overstock letter really helped - the timing was very good to show legislators that advertisers mean business.
August 31st, 2010, 05:52 PM #16More names to send emails - if you can help!
We have collected names of legislative advisors to swing legislators. If you have a few minutes and would really like to help, please send an email to these people. A suggested template is below. Thank you!
Sandy Michioku, firstname.lastname@example.org
Chris Norden, email@example.com
Dave Weiher, firstname.lastname@example.org
Dillon Gibbons, email@example.com
Liz Mooney, firstname.lastname@example.org
Anthony Archie, email@example.com
Almis Udrys, firstname.lastname@example.org
Nasia Leal, email@example.com
Brad Williams, firstname.lastname@example.org
Eusevio Padilla, email@example.com
Sara Rogers, firstname.lastname@example.org
Adam Gray, email@example.com
John Scribner, firstname.lastname@example.org
Robert Oakes, email@example.com
Cheryl Kozachenko, Cheryl.firstname.lastname@example.org
Stan Diorio, email@example.com
Adam Keigwin, firstname.lastname@example.org
Mandy Lee, email@example.com
Adrienne Alvord, firstname.lastname@example.org
Craig Reynolds, email@example.com
Lynda Gledhill, firstname.lastname@example.org
Krista Pfefferkorn, email@example.com
Joshua Tooker, firstname.lastname@example.org
Jeffrey Schmidt, email@example.com
Dear [First name],
I am an affiliate marketer and I oppose AB 1625 - Section 1. This proposal, an affiliate nexus tax, would devastate my small business and in the process, yield no new sales tax revenue for the state.
I make my living from advertisements placed on my websites [please insert a brief description of your sites - keep it very simple]. If AB 1625 passes, out-of-state retailers who advertise on my sites will terminate our advertising agreements to avoid collecting sales tax. This will devastate my income, and the state will not see any new sales tax dollars.
Retailers have made it perfectly clear that they will terminate, like they did in NY, NC and RI. Just yesterday, Overstock alerted its affiliates that they will terminate their advertising agreements if this law passes.
Please encourage our legislators to vote NO on AB 1625 - Section 1.
September 1st, 2010, 03:36 PM #17
The legislative session ended yesterday without a signed budget.
Legislators and the governor are regrouping and will figure out next
steps. For the affiliate nexus tax, it means we need to continue the
When we learn what is going on in Sacramento, we'll come up with a new
plan of attack. Stay tuned!
A little more information can be found on our blog:
October 6th, 2010, 10:08 AM #18
Anyone know the story if this Nexus Tax is still included in the CA budget that will be voted on this week???
October 6th, 2010, 11:56 AM #19
NO details of the agreement have yet been formally released - that is supposed to happen tomorrow.
October 6th, 2010, 04:14 PM #20
From the Wall Street Journal:
The California state Senate released Wednesday details of the state's budget package for the 2011 fiscal year, on which lawmakers plan to vote on Thursday.
The budget to close a $17.9 billion shortfall for the fiscal year ending in June 2011 includes $7.5 billion in cuts, an assumption of $5.3 billion in federal funds, and a reduction in spending for state employees by about $1.5 billion, according to a document posted on the state Senate's website.
As part of the budget, pensions for new state employees hired on or after Nov. 10 this year would be rolled back to levels that existed before the adoption of a 1999 law that expanded benefits. That means many state employees, including industrial employees and firefighters, would have a higher retirement age.
The budget includes no new taxes but would extend a suspension of a corporate tax break called the "net operating loss corporate tax benefit" for two more years, which would result in increased tax revenue of about $1.2 billion. More than 90% of corporations are exempted from the suspension, according to the document.
It also includes changes meant to create a stronger "rainy day fund" that the state could draw on in hard times, by increasing the size of the fund from 5% to 10% of general-fund revenue, restricting the use of the funds and creating a formula for putting higher-than-expected revenue for a given year into the fund.
Rank-and-file lawmakers are expected to vote Thursday on the package, following an agreement by top legislators and Gov. Arnold Schwarzenegger on Friday. Any disagreement could threaten the vote, which is already more than three months late.Your Ad Here.
October 6th, 2010, 08:29 PM #21
I heard the same thing from 2 sources: an affiliate marketer heard back from his legislator today that it looks like it isn't in the budget. And I heard from a trade group that it isn't in the budget. And, more telling to me, I didn't get the usual calls from the lobbyists this week or last begging us to be in Sacramento.
They vote tomorrow. Fingers crossed!
October 6th, 2010, 08:56 PM #22
The details were released earlier today, with this comment:
No longer includes various tax enforcement efforts, including requiring
the collection of Sales and Use Tax by out-of-state Internet retailers.
The vote is tomorrow but I'm sure the governator will approve of this clause.
I just added the actual budget proposal on our site:
Fingers Crossed in California!*|*Performance Marketing Association
October 6th, 2010, 09:47 PM #23
Its not a question of him approving "this clause" - its all or nothing, and he, as usual, is taking credit for getting an agreement on a budget, thought it will be the longest delay in approving a budget in California history.
Yes, we affiliate marketers, own der gropenfuhrer a significant amount of gratitude for his stance on any form of an internet tax, but it is a mistake to think he took this position because he either understands affiliate marketing or he wants to help affiliate marketers specifically. While he has been a strong proponent of certain environmental and civil liberty issues, he is still first and foremost, a big business proponent and generally anti-tax in any form. There are significant reasons why his approval rating is now 23%.
We are safe until next year.
We now need to education the people, the politicians, the lobbyists, as to the real effect of this tax proposal.
October 7th, 2010, 11:09 AM #24
If you want to see the vote live, it is being broadcast here:
The California Channel
I don't know if there's anything else on the agenda. I'm guessing there will be lots of grandstanding, it won't be a straight-up vote-and-be-done-already.
October 7th, 2010, 11:19 AM #25
The sessions open at 11:00am PST, by the way.
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