Page 1 of 2 12 LastLast
Results 1 to 25 of 40
  1. #1
    Newbie
    Join Date
    November 14th, 2007
    Posts
    2
    New tax in New York will affect all affiliate programs.
    Hello, all:

    I'm new here, and wanted to share something I just read. Under a new proposal by New York State Governor Eliot Spitzer, all online purchases made by New Yorkers will be taxed, if the purchase is from any online retailer that uses an affiliate program. At first glance, one may think this only affects New Yorkers, but that's not the case; if a retailer has to choose between taxing 20 million potential customers, or dropping an affiliate program, the latter choice may be preferred.

    An article in the New York Sun (linked below) explains the policy, its impact, and the effective date of the new tax: December 1, 2007.
    http://www.nysun.com/article/66382?page_no=1

  2. #2
    Moderator MichaelColey's Avatar
    Join Date
    January 18th, 2005
    Location
    Mansfield, TX
    Posts
    16,232
    Good find!

    "based on a novel legal theory"

    "The seller only needs to collect the tax on purchases in states where the vendor has a physical presence, such as a storefront or salesman."

    "It's just treating the affiliate the same way we would treat any other type of sales representative," Mr. Spitzer's budget director, Paul Francis, said in an interview.

    I don't think this will hold up. Affiliates are not in-house salesmen. We earn no salary, get no benefits, and have no employment arrangement with the merchants. I don't think our existence constitutes a "physical presence" by the merchant.
    Michael Coley
    Amazing-Bargains.com
     Affiliate Tips | Merchant Best Practices | Affiliate Friendly? | Couponing | CPA Networks? | ABW Tips | Activating Affiliates
    "Education is the most powerful weapon which you can use to change the world." Nelson Mandela

  3. #3
    Lite On The Do, Heavy On The Nuts Donuts's Avatar
    Join Date
    January 18th, 2005
    Location
    Winter Park, FL
    Posts
    6,930
    Once they try to make his leap, there are so many other things that would apply...

    If the merchant's seo or ppc agency is in another state...
    If the merchant's direct mail flyer printer is in another state...
    If the merchant's marketing manager telecommutes from another state...
    If the merchant buys billboard space in another state...
    If the merchant's hosting company is in another state...
    And on and on...

    Novel alright, as in fiction.

  4. #4
    Troll Killer and best Snooper!
    I decide when the pigs fly!
    Rhea's Avatar
    Join Date
    January 18th, 2005
    Location
    New York, USA
    Posts
    6,195
    Well this NY resident will make sure to do her online shopping before December 1st.

    As an affiliate I don't believe I work with any merchants who are based in NY or who have a physical presence (in the traditional sense) in NY. But this could be problematic for those of you who work with big box stores that have a physical presence in pretty much every state.

    I am not a physical presence, dammit! I am but a mere figment of Eliot Spitzer's runaway imagination.

  5. #5
    Newbie
    Join Date
    November 14th, 2007
    Posts
    2
    The implications are even more far-reaching:

    >An affiliate may be defined as broadly as any individual or entity receiving any compensation.

    >An affiliate program may be defined as any process providing any form of compensation to any individual or entity.

    >An affiliate link may be defined as the appearance of any item on any web page through which any compensation is provided.

    If this is allowed to occur, you can be certain that many, if not all, states will adopt this policy (how many times have you seen a state turn down a new revenue stream?).

    Also, to be clear, this has little to do with *affiliates* who reside in New York state; this has to do with ALL online retailers that have, or participate in, any affiliate program. If an online retailer provides, or participates in, an affiliate program--whether they have a traditional "physical presence" in New York state or not, they *must* charge sales tax to all customers who reside in New York. Even if a retailer has no affiliates who reside in New York state, under Governor Spitzer's new policy, they still must charge sales tax.

  6. #6
    ABW Ambassador newestuser's Avatar
    Join Date
    February 14th, 2007
    Posts
    505
    I'm not a salesman! I don't sell anything for any merchants, or collect any money from buyers! I am not a store; someone can't come to my house to get merchandise. I just provide links to the stores which let the people buy direct.

    The transaction is wherever the store and buyer are, not the affiliate.

    I think of us more like a magazine/tv/newspaper ad... like the ones that say go overstock.com/maxim or some other tracking-type method.
    Last edited by newestuser; November 14th, 2007 at 10:04 AM.

  7. #7
    ShareASale President/CEO and ABW Veteran Brian - ShareASale's Avatar
    Join Date
    January 18th, 2005
    Posts
    3,657
    My favourite pizza place is in NY... do I owe tax this year?

    If I were a New Yorker, I would be incredibly dissapointed in my leadership at this point.
    Thanks,

    Brian Littleton
    President/CEO - ShareASale.com, Inc.

  8. #8
    ABW Founder Haiko de Poel, Jr.'s Avatar
    Join Date
    January 18th, 2005
    Location
    New York
    Posts
    21,609
    Spitzer's approval rating has tanked in the past month ... literally down 40% between this lunacy and the illegal alien driver's licenses ... don't get me started.

    Edit ... just saw on the news his disapproval rate is 56% and approval rate is only 36%
    Continued Success,

    Haiko
    The secret of success is constancy of purpose ~ Disraeli

  9. #9
    ABW Ambassador Sam Bay's Avatar
    Join Date
    January 18th, 2005
    Posts
    1,603
    Well, this is sad news, but not only for New Yorkers. Virtually almost every state officials are looking for such an initiative to jump on the board tax Internet sales.

    A few things:

    - Tax payers already supposed to calculate their Internet purchases and include and pay the appropriate tax in their return. But, no one really does this.

    - In NYC, currently there are no taxes charged on apparel and shoes purchases that are less than $110.

    - Many of the top online retailers, Walmart, Best Buy, Macy's already charge and collect sales tax for Internet sales, as they have physical presence in every state.

    I would guess (and hope) that top online-only retailers will strongly object to this, as it affects them (and us) the most. And there is hope, because basing the taxability on the theory that affiliates are salesmen is pretty weak, in my opinion.

    Or, maybe I should consider moving before merchants starts cancelling their New York-based affiliates to avoid the sales tax.
    SomethingStore.com - Surprise and Delight!

  10. #10
    Super Dawg Member Phil Kaufman aka AffiliateHound's Avatar
    Join Date
    January 22nd, 2007
    Location
    West Covina, CA
    Posts
    8,443
    It would be real intersting if the scheme were to withstand judicial scrutiny, and NY State started auditing merchant programs, and they were to discover that merchants have failed to report (ie, "track") large numbers of sales that were actually the result of affiliate links.
    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]

  11. #11
    Moderator MichaelColey's Avatar
    Join Date
    January 18th, 2005
    Location
    Mansfield, TX
    Posts
    16,232
    There's no reason for them to audit. They're proposing to require merchants to charge sales tax on all orders shipped to NY if the merchant has an affiliate program. It doesn't matter whether it's an affiliate order or if the affiliate is in NY. They're arguing that the mere existence of an affiliate program means that the merchant has a physical presence in NY.
    Michael Coley
    Amazing-Bargains.com
     Affiliate Tips | Merchant Best Practices | Affiliate Friendly? | Couponing | CPA Networks? | ABW Tips | Activating Affiliates
    "Education is the most powerful weapon which you can use to change the world." Nelson Mandela

  12. #12
    .
    Join Date
    January 18th, 2005
    Posts
    2,973
    I understand the logic here, but I agree that it's flawed, because an affiliate program is ADVERTISING, and an affiliate is a publisher, not a "sales agent."

    The fact that affiliates are paid advertising fees that are expressly computed based on a percentage of sales should NOT make a difference, since we all know that pay-per-click CPM-based advertising is still evaluated by smart merchants using the same measure (ROI based on sales).

    I still remember seeing many porn-sites in 1998 claiming to pay publishers on a "per-click" or a "per-adview" basis, but their contracts provided that the rate would be adjusted based on actual sales, so that it was really just an affiliate program disguised as a CPC or CPM advertising program.

    Ultimately, however, tax fairness will eventually require that ALL US-based online merchants collect state sales taxes for all states, just as physical stores do. Many consumers will actually spend $80 plus $6.95 shipping to an out-of-state internet retailer instead of going to a local store and paying $80 plus $7 sales tax. This is economically absurd.

    And what's wrong with allowing people who own and drive cars to get driver's licenses so that they can register their vehicles and buy auto liability insurance? No, we shouldn't allow states to "legitimize" illegal immigrants, but we also shouldn't continue to impose all insurance costs only on those of us who are eligible to obtain a driver's license thus legally able to register a car or buy car insurance.
    Last edited by markwelch; November 14th, 2007 at 07:03 PM.

  13. #13
    Super Dawg Member Phil Kaufman aka AffiliateHound's Avatar
    Join Date
    January 22nd, 2007
    Location
    West Covina, CA
    Posts
    8,443
    Quote Originally Posted by MichaelColey
    There's no reason for them to audit. They're proposing to require merchants to charge sales tax on all orders shipped to NY if the merchant has an affiliate program. It doesn't matter whether it's an affiliate order or if the affiliate is in NY. They're arguing that the mere existence of an affiliate program means that the merchant has a physical presence in NY.
    Right

    "...
    "Under this novel theory, any e-retailer who pays a New York-based Web site operator a commission would be required to start collecting sales taxes on any purchase from New York, regardless of whether it originated from an 'affiliate.'
    ..."
    But, there's always a reason to audit, as far as taxing authorities are concerned. If this become law, they will certaintly audit some merchants when disputes arise as to internet income, internet income from NY state residents, etc.
    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]

  14. #14
    .
    Join Date
    January 18th, 2005
    Posts
    2,973
    MichaelColey wrote:
    "There's no reason for them to audit. They're proposing to require merchants to charge sales tax on all orders shipped to NY if the merchant has an affiliate program. It doesn't matter whether it's an affiliate order or if the affiliate is in NY. They're arguing that the mere existence of an affiliate program means that the merchant has a physical presence in NY."
    And that would be consistent with the current basis for collecting sales tax: having a "physical presence" in a state, which includes a company with a single employee working in the state (if Amazon hired me to work full-time for them from my home -- unlikely as that is -- they would then be required to collect sales tax for all sales to California).

    It's also important to recognize that many states are more aggressively auditing companies (and more rarely, individuals) to determine if we are paying our "use tax" (which most states impose on any purchases where sales tax was not collected). A large company that buys hundreds of computers or lots of furniture from out-of-state merchants may well face some very large tax bills, if they are audited.

  15. #15
    Life is Supposed to be Fun! Rexanne's Avatar
    Join Date
    January 18th, 2005
    Location
    Los Angeles
    Posts
    12,360
    Quote Originally Posted by Brian - ShareASale

    If I were a New Yorker, I would be incredibly dissapointed in my leadership at this point.
    I though Elliot Spitzer was a good guy until this mess.

    Guess NY is gonna be switching leaders in the near future.
    Peace,

    Rexanne

    Rexanne.com
    Loving Everyone's Child Creates Magic


  16. #16
    .
    Join Date
    January 18th, 2005
    Posts
    2,973
    AffiliateHound wrote: > "But, there's always a reason to audit, as far as taxing authorities are concerned." <

    My understanding is that audit rates have consistently declined over the past 20 years or so, and I believe they've dropped more significantly during the past 5-6 years.

    Unless you try to deduct home-office expenses or qualify for the Earned Income Credit, your chances of being audited are extremely remote (assuming that you don't omit income from a W-2 or 1099, or claim astonishingly unusual deductible expenses). As you earn more money, your chances of being audited actually decrease.

  17. #17
    Super Dawg Member Phil Kaufman aka AffiliateHound's Avatar
    Join Date
    January 22nd, 2007
    Location
    West Covina, CA
    Posts
    8,443
    Quote Originally Posted by Rexanne
    Guess NY is gonna be switching leaders in the near future.
    He just took office Jan. 1 - you've got at least 3 more years of him.
    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]

  18. #18
    MasterMike HardwareGeek's Avatar
    Join Date
    January 18th, 2005
    Posts
    3,810
    when a bunch of you on this site were loving Spitzer because of his anti adwhore ways and what not and saying NY is getting a great gov. I disagreed, and now you guys see why

  19. #19
    Moderator MichaelColey's Avatar
    Join Date
    January 18th, 2005
    Location
    Mansfield, TX
    Posts
    16,232
    Quote Originally Posted by AffiliateHound
    But, there's always a reason to audit, as far as taxing authorities are concerned. If this become law, they will certaintly audit some merchants when disputes arise as to internet income, internet income from NY state residents, etc.
    Right, but the auditors would care less whether affiliate orders tracked to the affiliates or not. They get their tax either way.
    Michael Coley
    Amazing-Bargains.com
     Affiliate Tips | Merchant Best Practices | Affiliate Friendly? | Couponing | CPA Networks? | ABW Tips | Activating Affiliates
    "Education is the most powerful weapon which you can use to change the world." Nelson Mandela

  20. #20
    ABW Ambassador Sam Bay's Avatar
    Join Date
    January 18th, 2005
    Posts
    1,603
    Quote Originally Posted by HardwareGeek
    when a bunch of you on this site were loving Spitzer because of his anti adwhore ways and what not and saying NY is getting a great gov. I disagreed, and now you guys see why
    Umm... Because you knew he was going to do this?
    SomethingStore.com - Surprise and Delight!

  21. #21
    Super Dawg Member Phil Kaufman aka AffiliateHound's Avatar
    Join Date
    January 22nd, 2007
    Location
    West Covina, CA
    Posts
    8,443
    Quote Originally Posted by markwelch
    My understanding is that audit rates have consistently declined over the past 20 years or so, and I believe they've dropped more significantly during the past 5-6 years.
    As far as the IRS is concerned, audit rates did drop considerably for several years, as resources were diverted to other objectives. However, this past year, their audit rate has increased, and they recently announced that not only will audits increase at a higher rate than they have for years, but for the first time, US taxpayers will be subject to random audits.

    In the past few years, many states have stepped up their auditing rates and procedures, in order to help meet their increased financial needs. I remember a couple of years ago the state of Washington made an announcement about a new system to locate and audit businesses who may have under reported income on their Washington state taxes.
    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]

  22. #22
    Super Dawg Member Phil Kaufman aka AffiliateHound's Avatar
    Join Date
    January 22nd, 2007
    Location
    West Covina, CA
    Posts
    8,443
    Quote Originally Posted by MichaelColey
    Right, but the auditors would care less whether affiliate orders tracked to the affiliates or not. They get their tax either way.
    I didn't say they would care about that, just that it could be a bi-product of such audits.
    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]

  23. #23
    Moderator MichaelColey's Avatar
    Join Date
    January 18th, 2005
    Location
    Mansfield, TX
    Posts
    16,232
    It's totally unrelated, and there's ZERO chance that a tax audit would identify any problems with affiliate tracking.
    Michael Coley
    Amazing-Bargains.com
     Affiliate Tips | Merchant Best Practices | Affiliate Friendly? | Couponing | CPA Networks? | ABW Tips | Activating Affiliates
    "Education is the most powerful weapon which you can use to change the world." Nelson Mandela

  24. #24
    MasterMike HardwareGeek's Avatar
    Join Date
    January 18th, 2005
    Posts
    3,810
    Quote Originally Posted by Sam Bay
    Umm... Because you knew he was going to do this?
    No because I knew he wouldn't be a good govenor, he was just doing all those good things to get publicity, and everyone neglected the bad things he was doing. Sometimes good headlines hides the bad.

    By the way local news just reported about this, then retracted saying Spitzers camp is backing down but may look into it for next year.

    Bad past 2 weeks for spitzer, first he backs down on the illegal imigrant license thing and now on this supposed tax increase.

    I'm Sleepy

  25. #25
    Newbie
    Join Date
    November 14th, 2007
    Location
    Rochester NY
    Posts
    20
    Quote Originally Posted by Brian - ShareASale

    If I were a New Yorker, I would be incredibly dissapointed in my leadership at this point.
    I am From NY - and I agree THAT Eliot is NOT a good leader, but this thread isn't really about that but...

    Eliot's power has gone to his head, I am sure some of you have heard of the "give them licenses" as well law he was trying to pass a few weeks ago.

    @The op ~ Great find THANKS!

+ Reply to Thread
Page 1 of 2 12 LastLast

Similar Threads

  1. New York may tax even more online...
    By Joshua in forum Midnight Cafe'
    Replies: 9
    Last Post: December 18th, 2008, 08:14 PM
  2. Three New York lawmakers Against Tax
    By Trust in forum New York Affiliate Tax
    Replies: 0
    Last Post: July 17th, 2008, 09:31 PM
  3. will the NY tax policy affect foreign merchant
    By big0707 in forum ShareASale - SAS
    Replies: 12
    Last Post: May 19th, 2008, 08:43 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
  •