Complete Coverage of the New York Affiliate Tax Issues Here

In case you haven’t heard New York State did pass that new tax law, I blogged about a couple weeks ago. The new law, dubbed the ‘Amazon Tax’, states that if companies like Amazon have affiliates in New York doing over $10,000 in sales, they must charge all customers sales tax, even though Amazon has no office, store or employees in the state.

So in essence the State of New York is changing the tax nexus law and considers affiliates the same way they would if a company had a physical store in the State, even though affiliates are not employees or even independent sales reps. Collecting this additional sales tax is expected to bring the state an extra $50 million this year. Amazon is fighting back!

See copy of the actual complaint Amazon filed against the State of New York.

New York Times: Amazon Sues New York State to Void Sales Tax Rules “Amazon said that its affiliates are not agents but simply sites on which it places advertising. The commissions it pays the sites are simply one method of paying for those ads, it argued.

The online retailer further claimed that the new rules violate the equal protection clause of the constitution because it specifically targeted Amazon. “It was carefully crafted to increase state tax revenues by forcing Amazon to collect sales and use taxes,” the complaint says, noting that “state officials have described the statute as the ‘Amazon Tax’.”

NOTE: I’m adding to this story as I find good info. So keep checking back!

Newsday: Amazon, or online, tax will hurt small business
“But the reality is that Amazon and other merchants with affiliate programs won’t bother adding the additional capability to collect New York tax; instead, they’ll take the far easier step of blocking any New York-based site from their affiliate programs. The result will be a tremendous loss of income for the numerous small New York businesses now participating in affiliate programs.

The law will also hurt companies like New York City-based LinkShare, which generates revenue by managing others’ affiliate programs. And it may make it harder for New York-based online retailers to find their own affiliates.”

Another big concern for our industry, as I mentioned in my 1st blog post about this a couple weeks ago, is that if New York gets away with changing the law regarding tax nexus, other states are sure to follow!

Added 1:25 – The Grok says:
“Affiliates May Be a Tax Liability! Amazon Sues New York…“