The Write Spot, LLC

Time to celebrate! The Colorado HB-1193 advertising tax has failed

2010-02-08T12:41:34-07:00

According to the PMA blog, the Colorado Advertising Tax is Dead. Today’s agreement has completely removed the inclusion of affiliates establishing nexus. Instead, Colorado HB-1193 is only focused on collecting use tax. The amended bill was released this morning.

We truly did it! This change is due to everyone’s hard work in testifying, writing letters and emails, going to the Capitol, posting on Twitter and blogs, leaving messages on state representatives’ Facebook pages, and making phone calls to committee members.

Most of all it’s due to the hard work of the PMA getting us all organized and keeping us updated on the latest news.

Thanks everyone!

We made a difference in Colorado HB-1193!

2010-02-05T13:36:52-07:00

Rebecca Madigan, Executive Director of the Performance Marketing Association updated us on the latest in the proposed Colorado affiliate tax in Colorado Advertising Tax passes out of Senate Committee.

Even though the bill passed out of the senate finance committee, there is some good news:

We were given an opportunity for an amendment that would exempt online affiliates from establishing nexus for out of state retailers.

Rebecca then writes:

This amendment, if completed as promised, may make some merchants comfortable enough to continue working with Colorado affiliates. For others, it may not.

…The best option for our industry is if this law does not exist. We will continue to fight for a repeal of the law, because affiliates do not establish nexus for out of state retailers.

What made the difference? Involvement by Colorado business people, bloggers and website owners!

The enormous affiliate effort to fight this bill, involving well over 150 people, was something the politicians didn’t expect, and didn’t see from any other group for any other bill. Phone calls, personal visits, letters, postings on the legislators’ Facebook pages and Twitter accounts, attendance at hearings, hand delivery of packets of information – this went on steadily for 2 weeks. This barrage of activity made a huge impression. The legislature understood the impact on the 4,200 affiliates in Colorado, realized the devastation that would result, and agreed to amend the bill.

Just show you how even us small business people, mom bloggers and solopreneurs can get the job done!

The Denver Post Says NO to Colorado HB-1193

2010-02-05T11:27:59-07:00

Today’s Denver Post editorial, Eliminate some of state's tax exemptions, came out against HB-1193:

We also have concerns about House Bill 1193, which would amount to what some call the "Amazon tax." The bill would require online retailers to collect sales taxes from state residents if the retailers have an affiliate in the state that actively solicits on behalf of the retailers.

Retailers with stores in the state who have to compete with online retailers make a good point about the relative disadvantage they are at by having to collect sales taxes when online interests do not.

But that is an issue that should be addressed at the federal level given a 1992 U.S. Supreme Court decision that said it would be unduly burdensome to force retailers to collect sales taxes on behalf of other states.

We are concerned the Colorado bill would prompt court challenges, as similar measures have in other parts of the country, and ultimately result in costing more than it raises, which is estimated at $4.7 million a year.

It would be wiser to wait until this issue is settled by federal law before attempting to collect such a tax.

They also ran a guest commentary, Equity for Main St. retailers in Colorado, by Christopher D. Howes, president of the Colorado Retail Council in response to Vincent Carroll’s column, Amazon buyers, beware: State has it in for you.

What Howes fails to realize is that if the law passes, Amazon and other online merchants will cancel their affiliate programs to protect their tax status. Even if they didn’t, they’d still have advantages over brick and mortar stores such as price, selection and convenience.

Majority Leader Paul Weissmann says that HB-1193 defeats "corporate welfare"

2010-02-04T09:41:14-07:00

I wanted to share with you the email I received from Majority Leader Paul Weissmann. But first I want to point you his Facebook page where Rep. Weissmann calls for a discussion of corporate welfare. Corporate welfare? Hmm, not from my perspective as a solopreneur who earns a small income from links to affiliate programs.

Here’s his email to me:

Thank you for your thoughts on the series of the bills the legislature is debating to help balance the budget. I apologize in advance for this “form letter” response. The volume of emails on the topic, both supporting the actions of Governor Ritter and opposing them, has been too much for individual responses.

The Legislature needs to close a budget gap of $1.5 Billion. This doesn’t sound like a lot in Washington, DC money, but it is huge here in Colorado. Part of the way the Governor and Legislature is looking to close this budget shortfall is to eliminate some of the tax credits and exemptions. Colorado has well over 100 of these.

The 12 that were debated Friday and will continue to be debated will raise less than 10% of what is needed to balance our budget – about $135 million. These range from the tax credit on bull semen to eliminating the tax exemption on junk mail. There has been over 24 total hours of public hearings so far on these bills and there will be more in the Senate.

Here are some of the other balanced budget measures the legislature is taking: We just took back $110 million from k – 12 education with the passage of Senate Bill 65. We anticipate cutting that budget an additional $260 million. Last year, and again this year, seniors will be losing their “homestead exemption,” adding to about $200 million over 2 years. The Governor released some prisoners 6 months early this summer, and that brought a huge firestorm. We are cutting higher education back to 2005 funding levels.

It is not easy to make these cuts, as most of the state budget is “caseload” driven. That is, most of our expenses depend on who shows up: the number of students in k-12 and higher education, the number of people on Medicaid, the number of prisoners, etc… Those numbers we have very little control of, although we are also working on some criminal sentencing reform, to decrease the number of people in our prisons.

I certainly would have chosen a different mix of tax credits and exemptions to eliminate. I hate the candy and pop one! But this money is critical if we want a state to provide services necessary. The environmental community understands this, and is not opposing the cuts we are making to the hybrid tax credit and the conservation easement tax credit – 2 of the 12. They know that any tax credit that is not pulled back, further cuts will have to be made in education, the biggest economic driver in the state.

Most of these tax credits were put in place when the economies of Colorado and the nation were more robust. Most of the 100 plus tax credits were put in by high priced, special interest lobbyists. When we give a tax credit to one person or interest we increase the tax burden, as a percentage, on everyone else.

While it is not popular to eliminate these tax exemptions and credits, I believe it is what we must do. I know there are other cuts the legislature can make and I’ll continue to pursue and vote for many of those cuts. Cutting programs is not popular either.

Paul Weissmann
State Representative

The soda and candy tax

Just for the record, as a healthy lifestyle blogger, I do like the “sin tax” on candy and soda. I’m willing to pay taxes on my Coke Zero and Lindt chocolate. To me that’s not food. Instead, they’re luxury items and special treats. Will it cause me to buy less soda and candy? No, I’m a self-admitted Coke Zero and chocolate addict. I’ll have to get my fix no matter what type of taxes are put on my favorite indulgences. I believe others are the same – they need their Pepsi or Red Vines and will buy them even if they a bit more expensive.

Even so, we may see people cutting back a little, similar to what java junkies did at Starbucks when the economy went south. Instead of having their coffee (or in this case soda or candy) every day, they may have their special treat once a week. You have to wonder if the tax will do more harm than good financially. Then again, we could use a bit less soda and candy in our lives. It’s better for our health, which means less trips to the doctor and possibly a lowering of medical costs. We’ll see.

More on why affiliate taxes don't work

2010-02-04T07:18:00-07:00

Just a couple of articles showing that affiliate taxes in other states have not worked.

Maybe it’s time that Colorado legislative representatives look into what has happened in other states, and try not to repeat the same mistakes.

More on Colorado HB-1193: Denver Post opinion piece and an email from Rep. Joe Rice

2010-02-03T13:58:10-07:00

State Rep. Joe Rice took the time to contact me back in response to my email to him last week. I’m bolding the best parts, namely where he explains that because his biggest priority is job growth, he cannot support measures that would negatively impact jobs – even if would help the Colorado budget crisis. Go Joe!

Dear Anne-Marie,

Thank you for taking the time to contact me regarding House Bill 10-1193, which would eliminate sales tax exemptions for out-of-state retailers including some internet retailers. I was one of only four Democrats who voted against this bill when it came before the full House for a vote on Monday.

The situation in which we find ourselves is a difficult dilemma. Due to the recent economic downturn, Colorado now faces an annual budget crisis that forces the legislature to make major spending cuts. However, our budget is now down to its bare bones. Between fiscal year 2008-09 and fiscal year 2009-10, the legislature cut general fund spending by about $245 million, according to Joint Budget Committee estimates. Ninety percent of the state general fund now goes to education, health and human services, and public safety, all of which have already sustained massive losses. At some point, further budget cuts become hazardous and counter-productive to the people of Colorado.

At the same time, I firmly believe that the driving engine of economic recovery is job growth. HB 10-1193 would remove sales tax exemptions for certain online retailers, and, in doing so, runs the risk of forces businesses out of the state and cutting jobs that we need in order to recover. Because job growth is my first priority, I cannot support measures that would negatively impact jobs, even to alleviate the budget crisis.

This debate has been a highly partisan one, and I am trying to make decisions that protect Colorado businesses while still funding the state. Unfortunately, my “no” vote was not enough to keep HB 10-1193 from passing the House on a 33-32 vote. If this bill passes in the Senate, it will come back to the House for a final vote, so there are still opportunities to protect jobs in the online retail industry. I will do my best to ensure that jobs are not lost in industries like yours, especially during times like these.

I would be happy to discuss these or other issues with you in greater depth. Please feel free to attend any of my three monthly town hall meetings or contact me to set up another time to discuss these matters. Once again, thank you for taking the time to write, and please don’t hesitate to contact me with any other questions or concerns.

Sincerely,

Joe

Joe Rice, State Representative
Colorado State House District 38
joerice38@msn.com

Read this article

Finally The Denver Post has been doing a little bit of reporting on HB-1193, but today’s column by Vincent Carroll explained it better than any other piece I’ve read so far: Amazon buyers, beware: State has it in for you.

Don’t forget to read the comments. Most are snippy BS, but the one by Jen G. also explains the situation well. (Disclosure: Jen is a friend of mine.)

Colorado HB-1193 update: email from Rep. Beth MCCann

2010-02-02T09:05:39-07:00

As you may have heard, the advertising tax, HB-1193 passed the Colorado House. The next round goes to the Colorado Senate.

Until then, I thought I’d share an email I got from Representative Beth McCann. Unlike some of the other cut and paste emails I’ve received from committee members and state representatives, hers is thoughtful and on point.

I like that she pointed out that smaller companies with affiliates in Colorado (like bloggers who sell ebooks or blogging conferences with affiliate programs) won’t have to pay (or charge) tax. Of course, this means the big boys like Overstock and Amazon will pay – and are being targeted.

Hi Ms. Nichols,

Thank you for your comments. This is certainly a very challenging time for individuals and businesses as well as governments with respect to the economy and our budget. I appreciate your taking the time to write and will keep your comments in mind as we struggle to come up with reasonable solutions to the budget situation.

HB 1193 will require online retailers to collect sales tax from Colorado residents who purchase products online if the retailers have an affiliation with a Colorado company that actively engages in solicitation on behalf of the retailer. The sales tax must only be collected if the retailer's cumulative gross receipts from Colorado sales generated by all affiliates in the state exceeds $10,000 in the preceding year.

I realize that this change will adversely affect many Colorado companies who manage online advertising for large out of state retailers. Many of you have emailed about your concern that these retailers will no longer allow advertising by Colorado companies and will move their contracts to out of state companies. If this happens, it will certainly have a negative impact on some Colorado businesses and it is possible it will not bring in the revenue projected.

However, it is important to remember that we are dealing with sales tax that is legitimately owed to the state of Colorado. It is also important to remember that the current situation has a very adverse effect on our own Colorado retailers who must collect sales tax, particularly independent book sellers who compete with huge companies like Amazon. Those Colorado residents who go to our retail stores and purchase products from our local businesses must pay sales tax and those who operate the stores must collect the tax and pay the state. By allowing these large out of state retailers to avoid paying Colorado sales tax, we are not only adversely affecting our state services, we are hurting our local retail businesses.

I agree with those of you who have said this should be handled at the federal level and I urge you to contact your Congressional representatives and make that argument. However, Colorado and other states must move forward this time to address our significant budget shortfall. The drafters of our legislation have looked at what other states have done and have learned from their efforts. As a result, our bill has a very narrow definition of affiliate. We will continue to look at this legislation to evaluate its impact.

Please rest assured that we continue to search diligently for savings in government. We have cut public and higher education, health care, mental health care, state services and many others. All of these actions are painful and negatively impact some people and businesses. Thanks for sending me your thoughts.

Sincerely,

Rep. McCann

Rep. McCann brings up a very valid point that it’s hard for independent and chain bookstores to compete with online booksellers like Amazon – not only on price and convenience, but on not charging sales tax as well.

Still, I believe that Amazon and other online sellers will cancel affiliate programs to continue selling in Colorado so they can pass on that “tax-free” benefit to consumers. Consumers don’t see tax revenue. Instead they compare and buy from the retailer with the best prices.

In addition, even if they do start having to pay sales tax, online sellers still have an advantage over “brick and mortar” shops – convenience, more variety, deeper discounts, and in my case, my town’s low sales tax as compared to the higher tax in Longmont, Boulder, Loveland or Ft. Collins.

Case in point, I often shop Kohls.com when I cannot find a color of clothing in my size. Yes, I may have to pay a few dollars in shipping, but that beats driving all over Boulder and Larimer counties to several Kohl’s stores. Plus I pay a cheaper sales tax and get exactly the merchandise that I want.

So advertising tax or no tax, local booksellers are still going to have a tough time competing without offering additional services like coffee shops, free wifi, book signings and story time activities for kids.

More on Colorado HB-1193 - my letter to the Dems

2010-01-29T10:58:01-07:00

On the advice of Rebecca Madigan, the executive director of the Performance Marketing Association, who has been lobbying hard on all our behalf, I sent another round of emails to the Colorado House Democrat Representatives just now:

Dear Representative,

I strongly oppose HB-1193, the affiliate nexus tax bill. If this bill passes, the state will NOT gain additional taxes, and my small business income will be drastically reduced in the process.

Part of my income is earned by selling advertising on my blogs. This includes affiliate links to vendors like Amazon.com on products I review and recommend. Every time one of my readers clicks on a link to Amazon – and makes a purchase on their site – I make a small commission. I only recommend and review products. I do not sell them directly to my readers and have nothing to do with any transaction. I do not collect their money or deliver a product. In fact, I never know who does the shopping on Amazon – only what they buy. Bottom line: I review and recommend products and refer traffic to Amazon through their affiliate program. That is it.

In addition, as a social media consultant, I teach Colorado freelance writers and bloggers how to use affiliate programs to earn an income. This modest income stream gives them the ability to earn money while working from home. This is very important for freelancers who do not have steady income, parents of young children, people with health issues who can’t work traditional jobs, and caregivers for sick and elderly relatives.

Also, as a former Weld County charter school board president, my school earned fundraising money through affiliate links that helped pay for essential classroom supplies. Many other non-profit agencies also use affiliate programs to raise money.

If HB-1193 passes, out-of-state retailers for whom I advertise and link to will terminate our partnership. Overstock.com has already given notice to Colorado affiliates that they will terminate if this law passes. When similar laws were passed in New York, North Carolina and Rhode Island, over 200 retailers terminated their affiliate programs, and many have promised to do the same in Colorado.

If these retailers terminate my partnership, my income will be reduced and I will pay less income taxes. This law would be futile: Colorado will not collect any new sales taxes, and my business will experience a loss in the process. A lose-lose for us both!

I respectfully request you reject HB-1193.

Best,

Anne-Marie Nichols

Anne-Marie Nichols
Social Media Consultant
The Write Spot, LLC

Here’s the list of Democratic representative in case you want to send your own letter. Rebecca stresses that you need to send your email TODAY before mid-day.

District – Representative - Email

1 Jeanne Labuda - jeanne.labuda.house@state.co.us
2 Mark Ferrandino - mferrandino@yahoo.com
3 Daniel Kagan - repkagan@gmail.com
4 Jerry Frangas - kjerry.frangas.house@state.co.us
5 Joel Judd - repjoeljudd@joeljudd.com
6 Lois Court - lois@loiscourt.com
7 Speaker Terrance Carroll- terrance.carroll.house@state.co.us
8 Beth McCann - beth.mccann.house@state.co.us
9 Joe Miklosi - Joe@joemiklosi.com
10 Dickey Lee Hullinghorst - dl.hullinghorst.house@state.co.us
11 Jack Pommer - jack.pommer.house@state.co.us
12 Paul Weissman - reppaul@aol.com
13 Claire Levy - claire@clairelevy.org
17 Dennis Apuan - dennis.apuan.house@state.co.us
18 Michael Merrifield - Michael@michaelmerrifield.org
23 Max Tyler - RepMaxTyler@gmail.com
24 Sue Schafer - sue.schafer.house@state.co.us
26 Andy Kerr - andy.kerr.house@state.co.us
27 Sara Gagliardi - sara@saragagliardi.com
29 Debbie Benefield - debbie@debbiebenefield.org
31 Judy Solano - judy.solano.house@state.co.us
32 Edward Casso – Edward@edwardcasso.org – mailbox full
33 Dianne Primavera - dianne.primavera.house@state.co.us
34 John Soper - johnsoper235@comcast.net
35 Cherylin Peniston - cherylin.peniston.house@state.co.us
36 Su Ryden - su.ryden.house@state.co.us
38 Joe Rice – joe.rice.house@state.co.us
41 Nancy Todd - nancy.todd.house@state.co.us
42 Karen Middleton - karen@karenmiddleton.com
46 Sal Pace - sal_pace@hotmail.com
47 Buffie McFadyen - mcfadyen2002@hotmail.com
50 Jim Riesberg - jim.riesberg.house@state.co.us
52 John Kefalas - john.kefalas.house@state.co.us
53 Randy Fischer - randy.fischer.house@state.co.us
56 Christine Scanlan - repscanlan@gmail.com
61 Kathleen Curry - kathleen.curry.house@state.co.us
62 Edward Vigil - edward.vigil.house@state.co.us
64 Wes McKinley - mckinley@cowboywes.com

Representative Brian DelGrosso on Colorado HB-1193

2010-01-28T11:52:15-07:00

I just received the following email from Rep. Brian DelGrosso:

Thank you for your interest in these significant tax increase proposals. As a small business owner myself, I take a strong stance against these harmful measures that will cost jobs here in Colorado, and I will be fighting to defeat them. HB 10-1189—HB 10-1199 are in direct opposition to Article 10 Section 20 of TABOR which states, “[d]istricts must have voter approval for any…tax policy change directly causing a net tax revenue gain to any district.” During these difficult economic times, the legislature should not be adding to the burden of Colorado families and businesses.

I would highly encourage you to follow the status of these bills online and join us at the capitol when the remaining bills go through committee. Your participation in the legislative process is greatly appreciated.

Only by showing the Democrat members of this committee how harmful these measures truly are will we be able to defeat these new tax measures.

If you have questions about how you can get involved, please let me know. Otherwise, please rest assured that I will do everything I can to defeat these bills.

Sincerely,

Representative Brian DelGrosso,
House District 51
brian@briandelgrosso.com

Way to go Brian!

Colorado Finance Committee Passes HB 1193

2010-01-28T11:41:40-07:00

To update you all, the Colorado Finance Committee did pass Colorado HB-1193. However, according to the comments at ReveNews, it still has a ways to go. Two of the yes votes (it passed 6 to 5) “were very apprehensive and want to learn more before their final house vote.”

More info and opinion:

Affiliate Tax Legislation has reached Colorado - We have work to do!
Performance Marketing Association – Help Fight the Advertising Tax, Register Your Support
Affiliate Advocacy – Colorado Hearing Date
Breaking News: Colorado Finance Committee Passes HB 1193 at ReveNews (make sure you read the comments)
Colorado Affiliates in Trouble if HB 1193 Passes at Affiliate Tip
Colorado House Finance Committee to vote on tax increases at Examiner.com
Overstock will Terminate Affiliates if Colorado HB 1193 Passes at Performance Marketing Association

While traditional media (the Denver Post, the Denver Business Journal, the Northern Colorado Business Report, the Colorado Springs Business Journal, the Colorado TV stations, et al) report on candy and soda tax ad naseum, there is no mention of HB-1193 threatening to drastically reduce the income of many Colorado small business people, work at home parents, freelance writers and bloggers. Shame on you!

Read how you can help: I oppose Colorado HB 1193 - the affiliate nexus tax bill