Comments on: Drs. Foster and Smith Terminates Virginia Affiliates

By: Geno

Geno — Thu, 18 Feb 2010 18:18:52 +0000

Thank you for your comment, Mellie, and for this blog post too: "Where is the Progress".

By: Melanie Seery

Melanie Seery — Thu, 18 Feb 2010 17:14:20 +0000

Thank you for writing about this termination of affiliates without sufficient warning. I find it inexcusable that we are still seeing this reaction by some merchants. We witnessed it in 2008 and 2009. To continue to treat ethical affiliates with such disregard is not acceptable. I hope that affiliates in other states pay attention to these actions.

I understand the business decision to terminate affiliates but the manner in which they are conducted is wrong. All ethical affiliates deserve advance notice.

In addition the removal of affiliates now, before the law takes effect, may not remove the nexus since many of these laws will say nexus is determined by the previous four quarters.

By: Geno

Geno — Thu, 18 Feb 2010 15:27:20 +0000

RJ, I don't believe forming a business in another state would be a solution, as physically you will still be doing business in the state that has the tax law (right now there are only three such states: NY, RI, and NC). If you move out of the state, that will help, but there is no guarantee that your new state will not turn towards such a tax in the coming months. Patrick, thank you for your question too. I believe that (i) it makes no immediate business sense terminating affiliates in connection with a "pending bill." "Pending" doesn't affect them, and unless they are doing this with a hope to influence the legislators, it isn't a good decision. (ii) Secondly, there is a way for merchants to comply with the law (if it ever becomes one), and keep the affiliates on board. See more here (on a NY example). There always are solutions that are more humane than killing. Unfortunately, the latter is being deemed by many merchants as the only way out.

By: Patrick

Patrick — Thu, 18 Feb 2010 14:32:43 +0000

Geno – while I certainly understand that it may be a big mistake to remove affiliates for almost any reason (sans fraud or violating the affiliate agreement), do you think that merchants who “due to business reasons connected to the pending [tax] bill” are trying to do what’s best for customers (not collecting tax)…even if that means removing affiliates?

By: RJ

RJ — Thu, 18 Feb 2010 09:52:30 +0000

I see that this is a growing issue with states going this route which is hurting affiliates.

Do you know if there is a runaround for this, such as forming a LLC or other business type in another state , would that bypass the tax laws ?

It sucks and I hope they do not do this to my state, because it will be cheaper for me to move then to stay (unless there is in fact a runaround).