Activist Shout Out

We recognize and applaud all the hard work being done by grassroots volunteers who generously give their time and talents to battle against the advertising tax bills in their respective states. Without their participation the industry wouldn’t be able to continue this fight.

Who: Alan Gray, publisher, NewsBlaze.com

Location: California

Summary: Alan was extremely active in the fight against the advertising tax in California in 2009 and remains a strong participant in 2010 as another bill resurfaced earlier this year. As an affiliate who happens to live near the state capitol, Alan was always ready at a moment’s notice to head over to Sacramento to speak with legislator and attend hearings.  He wrote letters and emails to lawmakers; met with legislators several times; and showed up in person at the capital every chance he had to explain affiliates’ opposition to the proposed legislation. He also worked to contact other media outlets and was interviewed by TV and news reporters explaining the negative impact of the bill on small businesses. Thanks, Alan!

See the archive of California posts

Join the California Google group

Other Shout Outs

Active

California

No change from yesterday: ABX8 8 is still in play until the extraordinary session ends some time this week. They have already extended the session and while we heard it was to close this week, they are known to extend extensions. We do know this: the letters and calls from affiliate marketers made a big impression on legislators. This would have been passed unanimously if it weren’t for the action of affiliate marketers.

Colorado

No change from yesterday: Bill HB 1193 was passed without ad tax language. However, the remaining language may impact out-of-state retailers, who should consult legal and tax experts. In a surprise move, Amazon terminated Colorado affiliates anyway, despite the law not having any material reference to affiliates.

Connecticut

A new ad tax bill, Number 5481, was proposed on March 8th in Connecticut. The language in this bill specifies a $2,000 per quarter threshold, which is much lower than the typical $10,000 threshold in other state’s ad tax bills. A hearing is tentatively scheduled for March 15th. If you are a Connecticut affiliate marketer, your help is needed. Please register your support here and join a Google group so we can communicate directly.

Georgia

No change from yesterday: Placeholder bills were introduced, that may or may not include ad tax language.

Illinois

No change from yesterday: The Senate Revenue Committee had a hearing discussing the ad tax bill, SB 3533, Thursday March 4th. Twenty one affiliates attended the hearing and Brian Littleton was chosen to be the only testimony. The bill has been ‘held over’, meaning the committee did not vote to move it forward. They may consider revising it in some way and return it to the committee. This is somewhat good news, it means the legislators are taking the affiliate point of view seriously.

Maryland

The Senate Budget and Taxation Committee will hear SB 824, the ad tax, on Wednesday March 17th; the hearing is scheduled for 1:15pm.

If you are a Maryland affiliate marketer, please register your support here so we can contact you directly with updates, and provide letter templates and talking points. You can also join a Google Group here.

Rhode Island

No change from yesterday: A bill, HB 7071, has been introduced to repeal the ad tax. Awaiting word from political advisers on progress of this bill.

Virginia

No change from yesterday: The ad tax bill, SB 660, was tabled by the House Finance committee. It will officially die when the legislative session ends on March 13th.

Inactive

Iowa

HF 2510 was killed in committee on 03/02/10. Phew!

Nevada

The special session ended 3/1/10 without introducing an ad tax bill.

Vermont

The ad tax bill never made it out of committee.

Activist Shout Out

We recognize and applaud all the hard work being done by grassroots volunteers who generously give their time and talents to battle against the advertising tax bills in their respective states. Without their participation the industry wouldn’t be able to continue this fight.

Who: Chris Herzog, Vice President of eCommerce Development, Geeks.com (a Genica Company)

Location: California

Summary: Chris has been very active in trying to help lawmakers in California understand what ABX8 8 means to the affiliate marketing community from the merchant perspective.  He works for Genica, which has more than 200 employees. He’s outlined the business reality of out-of-state merchants discontinuing their partnerships with California affiliates if this law was to be enacted as was the case in New York, Rhode Island and North Carolina. He also wrote letters to legislators opposing the advertising bill and volunteered on a number of occasions to participate in face-to-face visits with key lawmakers in his district of San Diego, where the bill’s biggest proponent Senator Susan Ducheny is based.  Thanks, Chris!

See the archive of California posts

Join the California Google group

Other Shout Outs

Active

California

No change from Friday: ABX8 8 is still in play until the extraordinary session ends some time this week. They have already extended the session and while we heard it was to close this week, they are known to extend extensions. We do know this: the letters and calls from affiliate marketers made a big impression on legislators. This would have been passed unanimously if it weren’t for the action of affiliate marketers.

Colorado

Update: Bill HB 1193 was passed without ad tax language. However, the remaining language may impact out-of-state retailers, who should consult legal and tax experts. In a surprise move, Amazon terminated Colorado affiliates anyway, despite the law not having any material reference to affiliates.

Connecticut

A new ad tax bill, Number 5481, was proposed on March 8th in Connecticut. The language in this bill specifies a $2,000 per quarter threshold, which is much lower than the typical $10,000 threshold in other state’s ad tax bills. A hearing is tentatively scheduled for March 15th. If you are a Connecticut affiliate marketer, your help is needed. Please register your support here and join a Google group so we can communicate directly.

Georgia

No change from Friday: Placeholder bills were introduced, that may or may not include ad tax language.

Illinois

No change from Friday: The Senate Revenue Committee had a hearing discussing the ad tax bill, SB 3533, Thursday March 4th. Twenty one affiliates attended the hearing and Brian Littleton was chosen to be the only testimony. The bill has been ‘held over’, meaning the committee did not vote to move it forward. They may consider revising it in some way and return it to the committee. This is somewhat good news, it means the legislators are taking the affiliate point of view seriously.

Maryland

The Senate Budget and Taxation Committee will hear SB 824, the ad tax, on Wednesday March 17th; the hearing is scheduled for 1:15pm.

If you are a Maryland affiliate marketer, please register your support here so we can contact you directly with updates, and provide letter templates and talking points. You can also join a Google Group here.

Rhode Island

No change from yesterday: A bill, HB 7071, has been introduced to repeal the ad tax. Awaiting word from political advisers on progress of this bill.

Virginia

No change from yesterday: The ad tax bill, SB 660, was tabled by the House Finance committee. It will officially die when the legislative session ends on March 13th.

Inactive

Iowa

HF 2510 was killed in committee on 03/02/10. Phew!

Nevada

The special session ended 3/1/10 without introducing an ad tax bill.

Vermont

The ad tax bill never made it out of committee.

There is a new report out from Tax Foundation that offers a look at the harmful impact of the “Amazon Tax” also called the advertising tax or affiliate tax.

Here is an excerpt:

As more states consider enacting so-called “Amazon tax” laws to force online retailers to collect sales taxes, a new Tax Foundation report cautions that such policies would not only fail to relieve short-term budget problems but also hurt long-term economic growth.

Click here to read the new report, “Amazon Tax” Laws Signal Business Unfriendliness And Will Worsen Short-Term Budget Problems, Tax Foundation Special Report No. 176.

The key findings:

• Frustrated by their inability to impose tax collection obligations on companies with no substantial connection to their state, several states are considering the adoption of “Amazon” tax laws. Such laws currently exist in New York, Rhode Island, North Carolina, and Colorado.
• An Amazon tax law requires retailers that have contracts with “affiliates”-independent persons within the state who post a link to an out-of-state business on their website and get a share of revenues from the out-of-state business-to collect the state’s sales and use tax.
• Amazon taxes are unlikely to produce revenue in the near term. New York continues to face a lengthy legal constitutional challenge. Rhode Island has even seen a drop in income tax collections due to the law.
• Amazon taxes do not level the playing field between brick-and-mortar and Internet-based businesses because they require Internet-based businesses to track thousands of sales tax bases and rates while brick-and-mortar businesses need to track only one.
• Unconstitutionally expansive nexus standards like the Amazon tax undermine legal certainty, burden interstate commerce, and harm economic growth.

Activist Shout Out

We recognize and applaud all the hard work being done by grassroots volunteers who generously give their time and talents to battle against the advertising tax bills in their respective states. Without their participation the industry wouldn’t be able to continue this fight.

Who: Rob Barbour, DNConsultants

Location: Virginia

Summary: Rob is a domainer that was extremely active in the ad tax fight in Virginia. He was diligent about writing letters and emails to his representatives letting them know why this bill would have a negative impact on small businesses. Rob also attended all the hearings to make his position known and educate lawmakers. He worked hard o find other affiliates that could participate in the grassroots efforts. Thanks, Rob!

See the archive of Virginia posts

Read more about the legislation in Virginia

Join the Virginia Google group

Other Shout Outs

Connecticut has proposed an ad tax as well: General Assembly Bill No. 5481.  This bill is more aggressive than we’ve seen in other states. The minimum threshold for qualification is if the retailer has $2,000 in quarterly sales through affiliates ($10,000 is the norm).

We also believe a hearing will take place March 16th; we’re still verifying this.

If you are a Connecticut  affiliate marketer, we need your help to fight this bill.

You can register your support on the PMA site, and we’ll keep you updated on status and activities.

You can join a Google Group where Connecticut affiliate marketers can discuss the status, and plan our grassroots activities.

Today, Amazon notified its Colorado affiliates that it was terminating them, a completely unexpected move. It must be noted that the law, HB 1193, no longer includes any reference to affiliate nexus. Amazon apparently has other reasons for terminating affiliates outside of  compliance with the new law.

We asked some legal experts to chime in:

Bennett Kelley of the Internet Law Center says: “Merchants should not rush to follow Amazon’s lead  since the “affiliate nexus” provision that has defined “Amazon Tax” bills to date has been stripped from the new law such that having in-state affiliates does not trigger any tax liability.

In addition, while the bill imposes burdensome and constitutionally suspect reporting requirements with respect to in-states sales for which no tax is withheld, there is a possibility this may be remedied by emergency legislation.  Given the distinction between other “Amazon Tax” states and the evolving nature of the current situation, Merchants should evaluate the facts and not act reflexively before terminating their Colorado affiliates.”

Gary Kibel with Davis and Gilbert says:

“The new law in Colorado takes a new and aggressive stance with respect to use taxes.  Merchants may be required notify consumers in detail about their obligations (if any) to pay such taxes as a result of purchases from the merchant.  This can be burdensome to many companies.  More than ever, Merchants need to pay close attention to pending and new legislation, as well as their affiliate agreements and processes to ensure that they are in compliance.”

If you are a merchant with concerns about Colorado, please consult a legal or tax expert.

Today Amazon took an unexpected action by terminating their Colorado affiliates – even though the new law does not have anything to do with affiliate nexus. This is clearly a political move, at affiliates’ expense, and Governor Ritter just put out this press release as a response:

OFFICE OF GOV. BILL RITTER, JR.
WWW.COLORADO.GOV/GOVERNOR <http://www.colorado.gov/governor>

FOR IMMEDIATE RELEASE
MONDAY, MARCH 8, 2010

CONTACTS
Evan Dreyer, 720.350.8370, evan.dreyer@state.co.us
Megan Castle, 303.319.8513, megan.castle@state.co.us

GOV. RITTER STATEMENT ON AMAZON.COM

Gov. Bill Ritter issued the following statement today criticizing Amazon.com’s decision to abruptly end its financial relationship with Amazon Associate businesses in Colorado:

“Amazon has taken a disappointing – and completely unjustified – step of ending its relationship with associates. While Amazon is blaming a new state law for its action, the fact is that Amazon is simply trying to avoid compliance with Colorado law and is unfairly punishing Colorado businesses in the process.

“My office worked closely with Amazon’s affiliates and associates to modify House Bill 1193 to specifically protect small businesses, avoid job losses and provide a fair, level playing field for on-line retailers and Main Street, brick-and-mortar retail shops alike.

“Amazon’s position is unfortunate, and Coloradans certainly deserve better.”

# # #

In an effort to educate merchants on what is happening in Colorado with regards to HB1193, we recommend that Colorado affiliates reach out the affiliate managers of programs they work with that are out-of-state.

Here is a template for an email that you can send to affiliate managers.

+++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++

Dear [affiliate manager’s name],

As a Colorado-based affiliate and valued affiliate in your program, I am reaching out to you to give you more information about the advertising tax in Colorado (HB1193).

Amazon sent a termination letter to Colorado affiliates today. I want to make sure your company understands this move by Amazon did not have to do with any affiliate nexus clause in the law. Affiliates do not establish nexus for out-of-state merchants.

The termination of Colorado affiliates by Amazon is apparently a move to protest against the final language of the bill, which puts a tremendous burden on merchants.  As a merchant you should definitely consult legal and tax experts about this issue.

Upon hearing about Amazon’s termination of Colorado affiliates, Colorado Senator Brophy, a big supporter of the affiliate cause in Colorado, tweeted that he will be reaching out to Amazon about this issue. @SenatorBrophy: I have call into Amazon about affiliates – will seek emergency legislation if necessary to fix.

To reiterate, the new law does not include anything about affiliate nexus. I ask that you carefully consider all the facts regarding Colorado HB1193, so we can continue our valuable and productive relationship.

If you have any questions, please feel free contact me.

Respectfully,

[Your name]

[Email address]

[Phone optional]