Who: Eva Rosenberg, publisher of TaxMama.com.

Location: Northridge, California

Eva Rosenberg, TaxMama.com

Earlier today, Eva Rosenberg, a Los Angeles area affiliate, joined the PMA to visit California State Assemblymember Felipe Fuentes, to make sure he understood the impact of the proposed ad tax. Eva isn’t just any ordinary publisher, she also happens to be a tax and small business expert. She was able to not only share what will happen to her affiliate business if this law passes, but she expertly explained the impact on out-of-state merchants and small businesses. We think Assemblymember Fuentes understands the impact on affiliates, and we hope he’ll carry that message to the budget committee.

Many thanks, Eva!

• More information on California legislation.
• Other Shout Outs

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If you need more convincing, here are the top ten reasons why you should participate: http://blog.netexponent.com/2010/07/affiliatebenchmarks-affiliate-research-ends/

Congressman Bill Delahunt (MA – Dem) introduced the Main Street Fairness Act on Thursday, July 1st. This is federal legislation that would help enact the Streamlined Sales Tax. Streamlined Sales Tax is essentially a way for states to collect sales tax from in-state and out-of-state retailers, whether off-line or on-line. This would, in fact, negate the ad tax. It is believed it will generate more sales tax revenue for states because more sales will be taxable. But, as is the way with anything involving taxation and legislation, it’s much more complicated than that.

Simplification of Sales Tax

The SST promises to simplify collection of sales tax across states. Consumers would pay the same sales tax rate whether they purchased a computer from an Idaho retailer or a Massachusetts retailer, in a physical store or online. But what would that tax rate be? Sales tax rates are determined by each state, and cities and counties can add percentages on to it as well. That’s why you often see a wide range of sales tax rates driving from one city to another, even within the same state. Some states charge as little as 5% sales tax, and some charge almost 10%. Finding a single rate across all states means a lot of compromise for each state, county and city that gets a cut of that sales tax revenue.

Each state also determines whether an item is taxable or not. Take potato chips, for example. Are they a snack – therefore taxable in some states? Or are they a food – therefore not taxable in some states? In Colorado, they recently passed the Soda Pop tax, charging tax for junk food, in an effort to curb bad habits and raise money for the state. What constitutes junk food? According to the bill, if the item has flour in it, it is not junk food and not taxable. If it has no flour in it, it is junk food and is taxable. Unless it is frozen, then it is not junk food and not taxable. Following this logic, a Hershey chocolate bar would be junk food and taxable. But what about a Kit Kat bar, the candy bar with the cookie inside? It has flour, so it would not be taxed. What about a frozen Snickers bar? No flour but if it is sold in the freezer, it is not taxed, and if it is sold on the shelf it is taxable. See the dilemma? Multiply that by 50 states. How in the world are they going to simplify that?

Federal Mandate

In order for every state to agree on simplified sales tax structure, there will need to be a federal mandate. The Main Street Fairness Act is believed to be the first step in that. However, states have fought long and hard to establish or maintain control on several aspects of independent governance. Sales tax collection is the ultimate example of a state’s ability to maintain economic independence from the federal government. Now they’re supposed to give that up? That’s a big reason why there are only 23 states signed on to SST right now.

The SST is managed by the National Conference of State Legislators (NCSL), an organization made up of state legislators. As such, these legislators, who deeply understand the boundaries between state and federal government, are shepherding SST.  This means the member states have agreed to compromise, they see the economic benefit of leveling the playing field. But that doesn’t mean they have been able to solve the detailed problems or get enough states on board.

SST and the Ad Tax

If SST goes into place, then the ad tax would seemingly disappear. States would get the sales tax revenue from Internet sales through SST, which is their goal with the ad tax too. However, many states, even those who have signed on to SST, are impatient and believe the ad tax will supplement their revenue before SST is implemented. Maryland proposed an ad tax this past year, despite the fact that the co-chair of the NCSL committee that is responsible for SST is from Maryland.

The NCSL actually sees the ad tax as something hindering the progress of SST, and publicly opposes the ad tax. Earlier this year they published an opposition letter to the ad tax. This has been a great help in convincing legislators to oppose the ad tax in several states.

The PMA and Streamlined

The PMA does not oppose or support Streamlined Sales Tax. First of all, we’re not an association formed around taxation policies per se, we just got dragged into the ad tax fight because it is so devastating to our industry. We do not have expertise or involvement in general sales tax policy. Second of all, SST still isn’t a great solution. It will take years to implement, to say the very least, it is unclear how it will change to accommodate the needs of its member states, and there are still constitutional challenges against it. Thirdly, many of our merchant members oppose or do not support SST. However, we will continue to track its progress. And we hope for continued common opposition with the NCSL against the ad tax.

Both houses of the state legislature, the Assembly and the Senate, have adjourned for the summer. They are adjourning before there is an approved budget and it is unclear which groups or committees will be formulating budget proposals. The legislators have been instructed to spend their time in their district offices for the next 30 to 60 days, but are asked to be within 24 hours from Sacramento, so they can return if there is an emergency session. The Budget Conference Committee has not revisited the issue of use tax collection or ad tax proposals since it was first discussed 2 weeks ago. It is unclear if they will pick up that issue, when they will meet again, or if another group will consider it.

The good news is that the legislators who have been involved in budget issues are familiar with the issues and seem to understand the negative impact of the ad tax on affiliate marketers. The bad news is we don’t know who will be considering the issue in the future. Please stay tuned.

North Carolina

The ACLU has filed suit against the state of North Carolina, intervening in the lawsuit previously filed by Amazon. In an attempt to force nexus, North Carolina has approached several out-of-state merchants, including Amazon, who terminated affiliates when the ad tax passed. The state is requiring detailed purchase information back to 2003, in an attempt to collect back sales tax, claiming these merchants already had nexus established if they had affiliates even prior to the ad tax being passed. As part of the audit, the state is requiring personally identifiable information on each purchase.

“The Constitution does not permit government agencies to conduct such sweeping collections of our personal and private information,” said Aden Fine, staff attorney with the ACLU Speech, Privacy and Technology Project. “Disclosing the purchase records of thousands of Amazon customers would violate their constitutional rights to read and purchase the lawful materials of their choice, free from government intrusion.”

• ACLU press release

The nomination period for the Board of Directors election opens August 1st.  We are looking for people passionate about performance marketing, who are interested in helping shape the future of the PMA and the performance marketing industry.

All Gold and Platinum members in good standing are eligible to run and vote for the new board. You must be a gold or platinum member in good standing (paid in full) by July 29, 2010, to run for a board seat. You must be a gold or platinum member in good standing by August 13, 2010, to vote for board members. Learn more about PMA membership.

Information on submitting nominations will be available by mid-July.

Garbage in...Garbage Out

Easily, one of the most frustrating problems facing publishers is the lack of standards and conformity for data feeds. Garbage in means garbage out. Inconsistent, incomplete and inaccurate information can hinder publishers’ speed to market and overall program results. The new Data Feed Standards Working Group will develop guidelines for consistent and accurate data feeds, to help simplify the lives of many publishers and advertisers.

This working group is open to all PMA members.

Sponsor: Ebates

Chair: Mitch Gibbs, Director of Partner Integration

Description:

• Create industry-wide standard approach to data for feeds and api’s.

Objective:

• Guidelines for good data/feed content for feeds and api’s.
• Spec for data feeds and api’s: product, coupon/offer

Target Members:

• Publishers, advertisers, OPMs and networks

First Meeting:

• Thursday, July 8, 2010 1pm – 2pm (PST)

Participation open to all PMA members. If you are interested in joining this working group, please email membership@performancemarketingassociation.com.

• Working Group Guidelines

If you’d like to join this working group and aren’t yet a PMA member, membership information can be found here.

As an affiliate marketer, I’m interested in answers to questions like these:

How effective are the following types of online lead generation activity for your advertisers? Hi ROI, Medium ROI, Low ROI or Not Relevant?

• Premium (i.e. stand alone landing page offer)
• Incentivised lead generation (consumer has been incentivised to be contacted)
• Co-registration (consumer has given consent to be contacted while registering for something else)

This is an Econsultancy survey, sponsored by Clash-Media, for the fourth year running, and is relevant for advertisers, agencies and publishers and for all international markets. The research is being supported by the IAB and the Performance Marketing Association.

The survey takes 5 minutes to complete and includes questions about the use of lead generation, its benefits and its budgets.

Those taking part in the research will get access to a free, advance copy of the full research report.

All answers are strictly confidential.

Take the survey now.

Deadline for completion: Friday July 2nd, 2010

Many thanks!

The Performance Marketing Association

Who: Peter Bordes from MediaTrust, Jeannine Crooks with Scudder Phillips, Colorado State Representative Jack Pommer,  and David Asseoff from Adperio.

Location: Affiliate Convention Denver 2010

Last week at Affiliate Convention in Denver, people integral to the fight against the ad tax in Colorado, spoke about the fight and the importance of working together as an industry. The fight against the ad tax in Colorado was unique because dozens and dozens of affiliate marketers got involved in the fight.

Many thanks to the panelists:

• Peter Bordes, who moderated the discussion and reminded everyone of the importance to get involved in the industry.
• Jeannine Crooks and David Asseoff, who shared their experiences in leading the charge.
• Colorado State Representative Jack Pommer, who was our primary adversary (he sponsored the ad tax bill), but who took to heart the problems the ad tax had on affiliate marketers.

View the presentation here: The Affiliate Marketing Tax: How Colorado & the Industry Mobilized its Fight

• More information on fighting the ad tax
• Other Shout Outs

Legislators in California continue to debate the Ad Tax and the Big Brother Sales Tax. Both of these taxes have been debated by several committees, voted down, killed, modified, and reemerged in new committees. Today the Budget Conference Committee began another meeting to discuss, amongst many things, use-tax collection. We have visited, lobbied, hounded, begged, and we continue to make sure the impact on our industry is known. We are confident the committee does know the impact on our industry, but the political pressures to balance a budget are so great that these issues will continue to be debated.

Colorado

The Direct Marketing Association notified its members it will file suit against the state of Colorado, claiming the Big Brother Sales Tax is ‘expensive, intrusive, and oppressive.’ The DMA is well versed in this issue; they were integral in the landmark Supreme Court case, Quill vs. North Dakota, which protected remote businesses from having to collect local and state sales tax.

Other states, such as Tennessee and California, have considered copying the Big Brother Sales Tax. There has been a tremendous amount of opposition to this kind of law, not only by commerce organizations, but by consumer privacy advocates. As a matter of fact, the only organization that supports it is the Multistate Taxation Commission (MTC), an organization of state tax collectors and the group that crafted Colorado’s legislation.