Affiliate Expert Matt Enders Stands-up for Affiliate Marketers in North Carolina
The internet advertising tax (dubbed by many as “the Amazon Tax”) is crossing the nation.
For those not familar with the tax, legislators in various parts of the country (the law has already passed in New York) are attempting to pass legislation that requires online retailers to pay State taxes based on the fact that those retailers have affiliates conducting business within the State. Typically, a State can only levy taxes against an online business if that business has a PRESENCE in the State or has a nexus with the State (which typically means that the business conducts significant business in the State).
With State budgets falling short this year because of the failing economy (think California where an Amazon tax is being considered)…many have taken desperate and drastic steps to raise (tax) revenue.
As a result, State Legislators are taking advantage of online businesses that have affiliate programs by building a “Nexus” argument by virtue of affiliate presence (not the actual business) in a particular State. For instance, based on the law Target.com is required to pay the State of New York online sales tax (which they logically pass to customers) if they have affiliates who reside in New York. It doesn’t matter how much money the affiliate is generating for Target and it doesn’t matter if most of the commission generated by the affiliate is being generated outside of the New York. As long as the affiliate lives in New York….the law would require Target.com to pay sales tax to the State of New York.
The knee jerk reaction of many online businesses is to terminate relationships with ALL affiliates residing in a State where the law has passed. This means that when New York passed the Amazon Tax many advertisers immediately terminated relationships with New York affiliates thereby putting many of them out of business or seriously threatening their future livelihoods.
Most recently, a piece of legislation was presented in Senate Committee in the State of North Carolina.
Affiliate expert and CEO of outsourced affiliate program management agency MGECOM – Matt Enders – was present during the Senate debate and he voiced his strong opposition to the law that is being considered in his state. Enders argued to the Senators that his business, and those of thousands across the state, could be ruined if the state tries to collect taxes from online shoppers.
Despite Matt’s well articulated argument the North Carolina Senate is still likely to consider the law.
Why? Senator David Hoyle who co-chairs the Senate Finance Committee in NC expressed desperation based on a serious budget crisis. Moreover, the Senator appears to be blind to the seriousness of the law – while, he most certainly wouldn’t want to hurt small businesses in NC…does he truly appreciate the number of people (affiliates / merchants) that will be effected by the law? Probably not.
I salute Matt’s exceptional leadership!!! If the law gets tabled in NC we will have Matt and some of his colleagues to thank.
The purpose of this post was really to thank Matt for his leadership and to “get out” the message that similar laws are likely under consideration in your State. If this is the case you need to put yourself on the front lines.
However, don’t go alone. There are recently created industry advocacy groups that may be able to assist. The two primary groups are the Performance Marketing Alliance (Pepperjam Network is a member) and Affiliate Voice. Both organizations are worthy of your consideration and membership.
The Amazon Tax poses a very real and significant risk to the future of the affiliate marketing industry.
It’s my hope that others leaders like Matt will step-up acorss the country to fight against similar laws.
June 23rd, 2009 at 11:05 pm
“Law Makers” just don’t get it. They’re doing this to increase revenue for their state yet they don’t see that if retailers like Amazon terminate affiliates in that state, then they’ve gained nothing and ruined the business of many affiliates in the affected state.
So state legislators, please take off the blinders…
June 24th, 2009 at 9:09 am
Jay – exactly.
June 24th, 2009 at 10:21 am
Kris, thanks for the message and the detailed post. I truly appreciate it.
You are right on the money when you say that legislators are acting out of desperation, and many online retailers are forced into a knee-jerk reaction.
We were at the General Assembly in force yesterday and had over 20 meetings with Finance Committee members, including Senators Hoyle and Luebke who were the original sponsors of the bill, before it was rolled into the actual Budget Bill.
I feel like we made some progress yesterday, particularly with Luebke. Hoyle was resitant at first, but started to see the big picture towards the end of the meeting. The questions remains: Will it make a difference when it comes time to vote.
I’ll be posting a full recap on our blog later today. We’ll keep fighting here in NC, and elsewhere when affiliates are under attack in different states.
June 24th, 2009 at 3:59 pm
Matt,
Thanks for your leadership!
Please post a link back here to your post.
Kris