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  1. #1
    Kung Fu Master Eathan's Avatar
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    Just got a letter from California
    They sent me a questionaire stating I may have to register with the state Board of Equalization for the collection and remittance of sales tax. Any other merchants receive something similar?
    Eathan Mertz

    Black Cat Mining - Gold Prospecting & Rockhounding Equipment

  2. #2
    ABW Ambassador affninja's Avatar
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    Hi Eathan, I got a similar-sounding letter last month. I'm an affiliate though so it could have been different. When I called and asked what it was about, they explained they're going after businesses above a certain revenue threshold to collect use tax on out-of-state purchases. As an inventory-less operation that doesn't make a ton of business purchases online, I don't expect to have a huge liability. I sent in the form but haven't heard anything back yet.
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  3. #3
    Speechless OTProf's Avatar
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    Uh-Oh

  4. #4
    ABW Ambassador superCool's Avatar
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    "Board of Equalization" ... that doesn't sound good

  5. #5
    Super Dawg Member Phil Kaufman aka AffiliateHound's Avatar
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    Quote Originally Posted by superCool View Post
    "Board of Equalization" ... that doesn't sound good
    "The Board of Equalization collects California state sales and use tax, as well as fuel, alcohol, and tobacco taxes and fees that provide revenue for state government and essential funding for counties, cities, and special districts", as opposed to the Franchise Tax Board that collects state income taxes.
    Since June 10, 2012 a vegan aarf but still writing the Hound Dawg Sports Blog
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  6. #6
    ABW Ambassador CathyM's Avatar
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    I received something similar from the State Board of Equalization. I don't have it in front of me (I'm traveling at the moment) but I think it said it went to all businesses with revenues over $100K in 2008 and who don't have a resellers license. It was about paying "use tax" on purchases from out of state. Yuck. My business doesn't have much, if any, maybe I bought some computer cables on amazon type of thing. It's just the hastle of figuring it out and having to file every year now.

  7. #7
    Full Member gcarson's Avatar
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    I believe PA has this and as far as I know, you're suppose to file it every year for purchases made outside of the state, business and consumers. Can't say I know anyone who does. Of course, I make all my purchases in state so I don't have to worry

  8. #8
    Kung Fu Master Eathan's Avatar
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    I'm an out of state merchant (Oregon) with no nexus of any kind in California.

    That's what's bothering me about the letter. California sales and use tax is, as far as I'm concerned, between California and its residents. I don't benefit from any of that tax money, nor do I gain a competetive advantage (I have to charge shipping), so I'd rather the California Board of Equalization stuck to their own business. I don't like their asking me a bunch of questions, especially with "Final Notice" at the top of the letter.
    Eathan Mertz

    Black Cat Mining - Gold Prospecting & Rockhounding Equipment

  9. #9
    Super Dawg Member Phil Kaufman aka AffiliateHound's Avatar
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    Quote Originally Posted by Eathan View Post
    I'm an out of state merchant (Oregon) with no nexus of any kind in California.
    Do you have affiliates in California? NY and other states say that is the nexus.

    If you interpret affiliate tax laws as a means to collecting already existing tax liabilities rather than being the imposition of new taxes, then agencies such as the Bd/Eq seem to be attempting to collect what they believe (hope?) is already owed.

    Note - this thread is the first I've heard about this and I try to keep up on all this bs.
    Since June 10, 2012 a vegan aarf but still writing the Hound Dawg Sports Blog
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  10. #10
    Super Dawg Member Phil Kaufman aka AffiliateHound's Avatar
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    Here is all of the info on this from the Cal Board of Equalization site: Frequently Asked Questions (FAQ) For Qualified Purchasers Pursuant to Revenue & Taxation Code Section 6225 (Registration for Use Tax).

    Question 2 defines "Qualified Purchaser" - basically every business with $100,000 in gross receipts in a year.

    Key, though, is Question 18:

    "I have no physical presence in California (i.e. store, office, warehouse, or other place of business). Must I register?

    No. If you have no physical presence in California, you are not required to register under ABx4-18."

    The law this comes under is shown as AB 18, 2009, which states at the very beginning:

    "The Sales and Use Tax Law requires a person conducting business as a seller of tangible personal property in this state to obtain a permit from the State Board of Equalization for each place of business and also requires a person selling tangible personal property for storage, use, or other consumption in this state to register with the State Board of Equalization.

    This bill would require a qualified purchaser, as defined, to register with the State Board of Equalization and to report and pay by April 15 the use tax owed for the previous calendar year, as provided. This bill would not apply to the purchase of a vehicle, vessel, or aircraft."

    This whole thing appears to have nothing to do with affiliate marketing and by its terms, would apply only to businesses IN California.

    Last I heard, Oregon was not part of California.
    Since June 10, 2012 a vegan aarf but still writing the Hound Dawg Sports Blog
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  11. #11
    ABW Ambassador CathyM's Avatar
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    also requires a person selling tangible personal property for storage, use, or other consumption in this state to register with the State Board of Equalization
    Affiliatehound, do you think that I, as an affiliate marketer that does not sell tangible personal property, still has to register anyway because of the >$100,000 in gross receipts?

    I just received my letter last week and have not digested the full implications of it. It was addressed to my husband and I personally, probably because I am a sole proprietor LLC. My first thought was, oh great, if I report $0 in use tax they are going to audit us. Then my husband reminds me, it's the state not the feds, they don't have anyone to audit you.

  12. #12
    Super Dawg Member Phil Kaufman aka AffiliateHound's Avatar
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    Quote Originally Posted by CathyM View Post
    Affiliatehound, do you think that I, as an affiliate marketer that does not sell tangible personal property, still has to register anyway because of the >$100,000 in gross receipts?

    I just received my letter last week and have not digested the full implications of it. It was addressed to my husband and I personally, probably because I am a sole proprietor LLC. My first thought was, oh great, if I report $0 in use tax they are going to audit us. Then my husband reminds me, it's the state not the feds, they don't have anyone to audit you.
    I was considering that part last night, and it seems that the letter of the law would exempt us - the "tangible property" clause is there for a reason, and we do NOT sell tangible property, we only advertise tangible property. This is one of many areas of this law that is obviously headed for litigation.
    Since June 10, 2012 a vegan aarf but still writing the Hound Dawg Sports Blog
    "If you don't have time to do it right, when will you have time to do it over?" -John Wooden;
    "Raj, there’s no place for truth on the internet." -Howard Wolowitz[/SIZE]

  13. #13
    Kung Fu Master Eathan's Avatar
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    Quote Originally Posted by AffiliateHound View Post
    Last I heard, Oregon was not part of California.
    Yet they still sent this to the address of what is clearly an Oregon business, with nothing that could be construed as a nexus in California.

    This whole thing appears to have nothing to do with affiliate marketing...
    The letter stated that transactions had come to their attention that prompted the request, and the questionairre includes questions that seem spun from the "Amazon tax" legislation California has been trying to pass.

    In my mind there's a potential relationship, which is why I posted a question to see if other merchants had received similar. Any other out of state merchants would've been a better question, but the question is still valid and relevant to affiliate marketing.
    Eathan Mertz

    Black Cat Mining - Gold Prospecting & Rockhounding Equipment

  14. #14
    ABW Ambassador CathyM's Avatar
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    Quote Originally Posted by Eathan View Post
    Yet they still sent this to the address of what is clearly an Oregon business, with nothing that could be construed as a nexus in California.
    That is perplexing.

    A friend of mine mentioned that he received a similar letter. It was about a month ago that he mentioned it to me and he is a California based business (plumbing). The only thing he could think of that might have triggered it is that he had purchased some heavy equipment on ebay from out of state. Maybe the transactions were large enough to give access to the banking records for cash transactions? That's pure speculation on my part.

  15. #15
    Kung Fu Master Eathan's Avatar
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    Thanks, Cathy. I think I'll give the Equalization folks a call on Monday and see if they can clarify. I'll be sure to report back.
    Eathan Mertz

    Black Cat Mining - Gold Prospecting & Rockhounding Equipment

  16. #16
    Kung Fu Master Eathan's Avatar
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    I spoke with the Board of Equalization earlier today to find out why I had received the letter. Apparently their auditors had come across a Black Cat Mining invoice while auditing a California company. I guess they didn't have a record of us or of the sale, so wanted to find out how we did business in California just in case we needed to register. We talked for a bit and she marked their records as "not needing to register."

    In short, it wasn't related to our affiliate program, but she did confirm that California is still working on passing some version of the Amazon tax.
    Eathan Mertz

    Black Cat Mining - Gold Prospecting & Rockhounding Equipment

  17. #17
    ABW Ambassador affninja's Avatar
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    Wanted to share an update on this. Three + months (government efficiency at it's best) after sending back in their form, I received a letter that said, "MANDATORY USE TAX ACCOUNT REGISTRATION NOTICE -- PLEASE READ IMMEDIATELY."

    It went on to explain that businesses with gross receipts over $100,000 are required to register with the state and file an annual use tax return for purchases made out of state. Specifically, they mention items from "a mail order catalog, the Internet, an online auction, [or] a television shopping network."

    It asked me to file use tax returns for 2008, 2009, and 2010. Since affiliate marketing is a pretty low-overhead operation, I wasn't too concerned. In total, I found about $100 worth of stuff for the business I'd bought out of state -- a bluetooth headset off ebay, business cards and checks from Vista Print, printer ink from Amazon, etc. My total tax due was about $10.

    The online form was really easy to fill out -- literally it's one number -- and then you input your routing info for the payment transfer.

    What bothered me the most was the $1.02 worth of penalties and interest I accrued for filing "late." Excuse me, I filed as soon as I was told to! Unfortunately the form to request "relief" from the penalties can't be filed online and I'm not sure it's worth the stamp. They say they won't excuse the interest, but might waive the penalty if you offer a good enough reason.
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  18. #18
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    Cool Stay out of the crosshairs!!
    I live here in California, I have a business here. I have all the mandatory required registrations. I do business with the Federal Govt. too My advice is ignore any form letter. California will try and collect from anyone for anything they can. Once you respond I'm sure you will move onto the "A" list and never be able to get off of it. Over the next 5 years my plan is to move from California to only run my internet business into my golden years. CALIFORNIA IS A BLOOD SUCKING LIFE SUCKING LEACH. DANGER DANGER DANGER.

    Hope I don't sound too bitter. I am a native Californian. Great weather.

  19. #19
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    California BOE is a pain in the ass
    To; Scales

    I live here in California, I have a business here. I have all the mandatory required registrations. I do business with the Federal Govt. too My advice is ignore any form letter. California will try and collect from anyone for anything they can. Once you respond I'm sure you will move onto the "A" list and never be able to get off of it. Over the next 5 years my plan is to move from California to only run my internet business into my golden years. CALIFORNIA IS A BLOOD SUCKING LIFE SUCKING LEACH. DANGER DANGER DANGER.
    Hope I don't sound too bitter. I am a native Californian. Great weather.

    Scales, thanks for your reply. I want to take your advice and ignore the letter. Here is my story.

    I am a one man show event/wedding video business, i am a student. I don't give out any goods. I am just trying to survive. I make $5000/ year from the video business. 2 months ago i receive a phone call from BOE. I am from Europe and to this point i don't even know who they were and that they existed. They told me i need a sellers permit. I didn't understand what they wanted! They asked me for my email to email me more information. When i asked them, how did they find me, they told me that someone reported me. I gave them my email. Next day they call me again claiming that the email didn't went through. I confirm my email and they resend it.
    I didn't respond to their email. 2 weeks later i got an other call from BOE. Telling me that i need to sign up for a sellers permit. I told them that they are on the wrong page. I do not sell goods. I sell my video services and put videos online via streaming etc and that i am a full time student.
    They insist that i need a sellers permit. I didn't react to their request. They left me 4 voice mails on my phone. I ignore them.
    Now, two months later! yesterday i receive a letter from the BOE.
    I didn't open it yet.
    I am not an American citizen. I am just a student on a visa. I don't even have a SSN!
    What can the BOE do? 2 weeks ago i just moved to an other address.
    Can i put the un-open letter back in the mail box with the notice, NOT DELIVERABLE, SENDER MOVED? I really don't that to deal with them.
    Any advice anyone?

  20. #20
    Affiliate Manager AffiliateWarrior's Avatar
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    I wouldn't recommend "ignoring a form letter" from the Board of Equalization. Give them a call and explain the circumstance. You will likely need to do a little paperwork to comply. You also might want to check with an Attorney with Internet Law experience as well to get a course of action plotted. Ignoring emails from government bodies usually leads to big trouble, fines, penalties, etc.
    Wade Tonkin - Affiliate Manager - Fanatics
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  21. #21
    Affiliate Manager AffiliateWarrior's Avatar
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    Might also want to become a member of the PMA and check in with them to educate yourself on what's going on and support their efforts on behalf of affiliates and merchants dealing with nexus issues.
    Wade Tonkin - Affiliate Manager - Fanatics
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  22. #22
    Affiliate Manager AffiliateWarrior's Avatar
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    The state is now in "dialing for dollars" mode - usually, they will crack open the Internet Retailer Top 500 issue and start dropping form letters.
    Wade Tonkin - Affiliate Manager - Fanatics
    NFLShop.com|Shop.NHL.com|NBAStore.com|Store.NASCAR.com
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