As you may already be aware, the State of California is again considering “affiliate nexus” language in their budget which could be voted on as early as one week from today.
The importance and urgency can’t be emphasized enough: your business is under attack, and your livelihood is threatened.
The Issue
California is attempting to define its resident affiliates as having a sales presence for out-of-state merchants. Therefore, these out-of-state merchants would now be responsible for collecting sales tax from California consumers. Many online merchants cannot afford that expense, and will need to end their affiliate programs with affiliates in California. This already happened in New York.
We strongly encourage you to contact your local representatives, and have crafted a sample letter which you could use to email or fax your local representative – you can add your own personal story and be a big help to the overall cause with your actions.
Sample letter:
http://blog.shareasale.com/wp-content/uploads/2009/06/OppositionLettertoCANexus.doc
Fact sheet on California and how many businesses are affected:
http://blog.shareasale.com/wp-content/uploads/2009/06/CaliforniaFactSheet.pdf
How to find the Assembly Member for your district:
http://www.assembly.ca.gov/clerk/MEMBERINFORMATION/memberdir_1.asp
By working together, and taking action, we can make a difference. Please take action immediately. The best way to defeat this legislation is to let your state senator know how this will devastate your business.
Thank you for your time,
Brian Littleton
President/CEO ShareASale.com, Inc.
Franklin Banker says
June 22, 2009 at 5:42 pmGreat work here. I read your sample letter and I have a suggestion for another paragraph covering the fact that current online business website owners pay state income tax on their business revenue income. Here is what I suggest adding at the end of the letter for them to think about.
****************
Finally, there are literally tens of thousands of small business website owners in this state that currently pay income tax on the revenue they earn, so this state will lose that revenue. Therefore I ask; Have you done any studies to determine how many of your small business LLCs are paying state tax on income from affiliate marketing or performance marketing? If not, you should do this before taking any action to cause an affiliate to lose his/her status with large online retailers.
This state could end up with a net loss by passing this legislation. I urge you to investigate this matter much more completely before enacting affiliate nexus and attempting to collect sales tax through this proposed new law.
Sincerely,
[Your Name and Signature]
Bill Couture says
June 23, 2009 at 11:07 pmIt would be a good thing for most California internet businesses if the state would impose sales tax collection rules on out of state sites. Currently, these out of states have an unfair price advantage as in state sellers already have to collect sales tax. Doing this will be a major help to local business both by leveling the playing field and by giving the government needed revenue. Contrary to the suggested letter it will increase sales of California business.
Brian Littleton says
June 24, 2009 at 10:55 amBill,
I agree that the tax needs to be collected somehow. I’m in support of any fair proposal to make that happen. The fact of the matter is that Californians owe this tax already, it isn’t a new tax, it is just one that they have not been paying voluntarily (same with everyone from all States).
Unfortunately, they have chosen to use a form of advertising to force businesses to collect tax. Instead of collecting the tax, they are instead terminating relationships with those advertisers who are almost wholly made up of small businesses.
This hurts small California businesses greatly. It also targets one type of advertising only, and arbitrarily puts the burden on them.
From there, California could just say… “If you have a lawyer in California, you have nexus.” … or maybe “If you search on Google, you have nexus”, etc… it is a very poor and unfair way to establish the nexus and force the tax collection.
Kevin says
June 25, 2009 at 4:23 amThanks for informing me about this issue. I read recently that Amazon dropped the state of NC for something similar to this.
As a website owner who started not that long ago, this is the sort of thing that makes me wonder what I would do if one day, with a signature from someone in power, everything I have worked so hard for one day vanishes. I guess that’s life. Gotta prepare and fight.
Well, I sent the assembly member of my district the letter that you wrote out. Hopefully if enough people do this, it will make a difference. We will have to wait and see.
Sirena Seth says
November 15, 2010 at 1:21 amI cannot feel that you just blogged about this subject. Not too several men and women realize the significance of these forms of issues