By John McCarthy, Director Search Engine Optimization
Recently lawmakers in seven states – California, Connecticut, New York, Hawaii, North Carolina, Maryland and Rhode Island have passed or are preparing to pass legislation that would require companies to collect sales tax if they have marketing affiliates in the state. Unfortunately other states are considering similar laws to collect sales tax for online purchases.
Last year New York passed an Internet-sales-tax law last year. This was challenged in court by both Overstock and Amazon, but both lost. Both companies are appealing the decision. Overstock dropped its affiliate program in New York but Amazon has begun collecting sales tax.
It turns out that consumers are technically supposed to pay a so-called use-tax for online purchases on their own. Purchases made over the internet and out-of-state are the most common type of transactions subject to a use tax.
For example, if you are a resident of State A which has a five percent "sales and use tax" on certain goods and services and you purchase a product or service in State B for use, storage or other consumption in State A.
Under most state laws, the State B vendor collects no sales taxes on the goods but the purchaser/user must still pay five percent of the sales price directly to the Department of Revenue in State A as a use tax. To the best of my knowledge, nobody follows this obscure law which is why the state governments are targeting the online merchants and their affiliates.
If you are an affiliate, manage an affiliate campaign or are an online business with an affiliate program, now is the time to use your voice to oppose certain harmful bills in your state before it is too late.