Episode #9 – Will the Amazon Tax Kill Your Affiliate Marketing Business?

Chaos Makes Sense | Affiliate Marketing / Affiliate Programs / Internet / Social Media Marketing – Matt Frary

If you earn any revenue from affiliate marketing you have to listen to this podcast to get the latest on the so called Amazon Tax and how state legislatures across the country are considering tax policies that could wipe out your affiliate income overnight. This is not a “Chicken Little the sky is falling” threat; it is very real and it has put thousands of affiliate marketers just like you out of business in the states that have passed the tax.

Have we got your attention?

We hope so because without a groundswell of support this Amazon Tax, which is a lose-lose proposition for both state treasuries and affiliate marketers is likely to become enacted in a number of states. If you don’t want to lose your business, if you don’t want to have to move to a different state to keep your business as some marketers in Illinois and California have done, then you need to listen to this conversation between Brian Littleton (@pmaassociation) President of the Performance Marketing Association Board of Directors and Matt Frary (@ChiefofChaos) CEO of SmarterChaos.com as they talk about the current threat and what needs to be done to counter it.

What is the Amazon Tax?

“Amazon Tax” is just the popular name for a nexus tax. A nexus tax, and every state has one, is a sales tax imposed by a state on any company who has a “presence” in their state. These taxes have been around forever. What’s in question today is what constitutes a “presence.” For example a catalog operation may have their headquarters in NY and distribution centers in IL and CA. Because they have a presence or “nexus” in IL and CA they are obligated to collect the sales tax on sales that originate in those two states as well as for sales that originate in NY. In the example above determining a presence or nexus is pretty easy to do. There are buildings and employees. But some states have decided that a company has a nexus if an affiliate living in the state has a link back to the company and is paid a commission. That link could be a banner ad, or a text ad, or a review or anything so long as the affiliate is compensated for sales he or she might drive.

Why is a Nexus Tax a Threat?

For sellers, collecting, accounting for and paying state sales tax can be a major administrative burden and expense. If a seller has a choice of collecting sales tax or not collecting sales tax they will always opt for the former and that’s exactly what Amazon has done. For example when California first introduced their “link based” presence nexus tax Amazon cancelled the accounts of all their affiliates living in California. Thousands of affiliates, large and small were out of the Amazon affiliate business the day the law took effect. Overstock.com did the same thing in Arkansas. Sellers don’t need affiliates in a particular state to sell to customers in that state.

What Can You Do?

Now we’re getting to the heart of the conversation between Brian and Matt. Matt shares his recent experience appearing before the Colorado legislature along with other affiliate marketers including Jen Goode (@jgoode) of JGoodeDesigns.com and Ashley Coombe (@AshleyBCoombe) of Trust The Experts Marketing in an effort to educate legislators. Brian discusses what the Performance Marketing Association (PMA) is doing on a national basis to prevent the passage of these laws and what is needed from members of the industry…like you. Both agree that legislators don’t have a clue what an affiliate is. They don’t realize how many of their constituents are affiliates or that affiliates come in all sizes but mostly small. But the biggest thing they seem to not understand is that by passing the nexus tax the seller will simply cancel the accounts of all the affiliates in the state meaning that it will pay no tax to the state because it has no affiliates. They also don’t recognize the financial distress they are imposing on affiliates who count on the commissions. Then of course there is the state income tax that won’t be paid on the affiliate income that no longer exists. If you would like more background on this issue you can check out Matt’s blog post on the topic or visit the PMA at http://thepma.org .

Now Here’s What You Have to Do!

You have to listen to this podcast now and here’s why:

• Learn if your state is one of the many who have an affiliate tax bill pending.
• Learn what you can do as an individual to put pressure on legislators.
• Learn why telling your own story can change the opinion of legislators.
• Learn what you can do to support the PMA in its efforts in your state.

The podcast is 40 minutes long and you need to invest that time to protect the security of your business!

The post Episode #9 – Will the Amazon Tax Kill Your Affiliate Marketing Business? appeared first on SmarterChaos.