Numerous concerned affiliates have been e-mailing me about the California online sales tax bill AB 178 asking for a concise clarification of what this situation really means for affiliates. I believe we should be looking at two sets of implications here: (a) the immediate (state-specific), and (b) the wider (nationally-spread) ones. Let’s briefly look at both:
Immediate Implications
If the bill becomes a law, merchants that do not wish to start collecting the additional tax will terminate California-based affiliates like Overstock terminated NY-based ones — as did CafePress, Footsmart, Jewelry Television, uBid.com and multiple other merchants — in May 2008 after the State of New York passed a similar law. This will cause thousands of companies to go out of business, and also lead to much wider consequences/implications (read on).
Wider Implications
These have already started revealing themselves. Other states (Minnesota, Hawaii, Connecticut, and Tennessee) are already looking into introducing the same tax. It is also being reported that a similar law is in the works in Illinois. The snowball effect is already obvious, and while Amazon chose to fight with the State of New York over the law that got the snowball rolling, they are already explicitly stating that they are not going to do the same in other states.
To gain further insight into the situation, please review the following links, and act:
- “How You Can Help” post by Brian Littleton
- “Next Steps for Merchants and Affiliates” post by Melanie Seery
- California Affiliates Forum at ABestWeb
- Campaign to Fight California Assembly Bill 178
- CA AB178 for Dummie GeekCast.fm podcast
- Google Opposes Proposed Sales Tax Legislation
This is your industry, and its future is very much in your hands now!
Merchants are quick to drop affiliates that operate out of states that have new tax bills. It is apparent, at least to me, that most states will eventually have similar tax bills. Then what? Merchants don’t actually plan on dropping affiliates that are in any of the states, thus putting an end to affiliate marketing in the US? That seems not likely.
Try to follow what’s happening since most affiliate networks are USA based. What will happen to affiliates from other countries like Canada. Unless we make more than $600 we generally don’t do anything.
@Greg:
No, I don’t think it’s gonna put an “end to affiliate marketing in the US.” I very much believe that a lot is still in our hands, and the initiatives that I’ve linked to in my post are very well worth supporting (if you care about affiliate marketing).
Also, a lot seems to stem from the misunderstanding of the term “affiliate” (see link to Brian Littleton’s post above).
@Jake:
Not sure I fully understand the question in your post (or was there one?) Also, there are plenty of affiliate networks that are not US-based, but I do not believe things should be different for a Europe-based network that has a US merchant that needs to collect the tax. It’s more about merchants, and their tax liabilities.
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