Hey Everyone, looks like there is another State entering into the #advertisingtax mix.
The below document is already a State regulation – and is now being used broadly to target Merchants with affiliate programs.
Some interesting notes from the regulation document:
- In order to qualify under the term of “Vendor”, total gross receipts in the State of Missouri (solicited in Missouri, and sold to Missouri resident) must be $500,000 or more in the preceding calendar year. (A company also qualifies if total U.S. gross receipts equal or exceed $12.5 Million). A company can also qualify as a vendor if they have a physical presence or sales agents in Missouri.
- Directly from the document:
A vendor does not have sufficient
nexus if the only contact with the state is
delivery of goods by common carrier or mail,
advertising in the state through media, or
occasionally attending trade shows at which
no orders for goods are taken and no sales are
made.
The entire document can be found here: http://blog.shareasale.com/wp-content/uploads/2009/07/12c10-114.pdf.
We strongly recommend contacting your legal advisers regarding this to determine if you have any liability.
Affiliates (in the Affiliate Marketing world) place advertisements on their websites in return for monetary compensation based on how well those ads work.
iPod Repair Owner says
September 2, 2009 at 8:02 pmBrian,
Thanks for the post on this. My iPod repair company is based in Texas and we have a successfully SAS Affiliate Program with a handful of affiliates in Missouri.
I was recently contacted by the State of Missouri and had to spend about on hour on the paperwork, survey, figure gathering that they requested.
After I received a second letter requesting the same information, I called them to make sure they received my first response, which they did, but then asked specifically about affiliate programs. I thought that was a bit odd, since (to the best of my memory) the first document didn’t use the word ‘affiliate’ once. During the same call, the pleasant woman mentioned that another letter would be going out that asked specifically about affiliate-generated sales. I received and responded to this letter the same day that it arrived.
That letter never specifically mentioned the thresholds that you detailed in your post, and I think it would have been helpful if they had included that information.
Anyways, thanks for the details, and keep us posted – this is interesting stuff.
Anthony Magnabosco, Owner
Maggie Brown says
September 13, 2009 at 10:27 amBrian, Thanks for the heads up on this. As a new start up I am well below the threshold, but good to know.
Josh says
September 17, 2009 at 7:51 pmWho is actually affected by this? The affiliate marketer or the advertiser?
Josh says
September 24, 2009 at 3:14 pmBrian, Again… who is affected by this? the affiliate or the merchant?
Thanks!
Brian Littleton says
September 24, 2009 at 3:18 pmJosh – everyone is.
States are asking Merchants to collect sales tax. This obviously directly impacts the Merchant as they are faced with a higher overall cost-to-consumer.
Instead of accepting this, many Merchants are simply dropping Affiliates from certain states.
This affects the income of those Affiliates, which in turn hurts the State on the issue of income tax.
The flaw in the logic being used by States is that they don’t recognize that instead of collecting the tax – Merchants are simply terminating Affiliates and thus the State is left with a) no tax collected and b) lower income for their residents.
Josh says
September 28, 2009 at 9:46 amBrian – Thanks for answering my question here. Your response makes this much more clear and is rather discouraging for me, a new affiliate marketer living in Missouri. But I will just keep moving along and hope for the best. Thanks!