Heads Up, California Affiliates: Online Sales Tax Proposed

Posted on5 CommentsCategoriesAffiliate / Advertising Tax, General Discussion

Yesterday, a friend and a known advocate of the affiliate marketing industry, Melanie Seery, posted an alert about California considering a sales tax similar to the one that got passed in New York last year. Melanie wrote:

California Affiliates had better get prepared, California Assembly Bill 178, co-authored by Charles Calderon (D) and Nancy Skinner (D) will be even more devastating than the NY bill. [full post here]

The existing law imposes a sales tax on retailers that are “engaged in business” in the state of California. The proposed one seeks to give a more narrow definition of a “retailer engaging in business in this state.” The new definition looks at a taxable retailer as:

…a retailer entering into an agreement with a resident of this state under which the resident, for a commission or other consideration, directly or indirectly refers potential customers, whether by a link or an Internet Web site or otherwise, to the retailer, if the cumulative gross receipts or sales price from sales by the retailer to customers in this state who are referred pursuant to these agreements is in excess of $10,000 during the preceding 4 calendar quarterly periods, except as specified. [Bill text here]

As Melanie rightfully concludes such a “definition of nexus clearly includes affiliates.” It’s time for the affiliates that work in the tenth largest economy in the world to unite and do everything possible to prevent the passing of the bill.

Read more about the subject at:

News coverage:

5 thoughts on “Heads Up, California Affiliates: Online Sales Tax Proposed

  1. Thanks Geno. This California Bill is just the beginning, many other states will follow.

    It is going to become very complicated to deal with all the different tax rates. A streamlined tax would be the best alternative but that will take Federal action.

    Hopefully the NY situation has prepared us for California but it will still be a mess if it passes. Passage is likely because of NY court ruling and the download taxes passed in other states.

  2. Melanie,

    Thank you for your comment, and for starting the movement. I can’t help but recall Kotter’s 8-Step Change Model, where the very first step is exactly what you’re doing now – “creating a sense of urgency.” Keep up the good work, Mellie!

    Yes, it does look like the passage is likely. And I have also heard of other states contemplating the same law (a fellow-affiliate manager told me about IL).

  3. Melanie of NYAffiliateVoice.com has just posted that the California State Committee on Revenue and Tax has set a hearing date for the California Bill 178, and it is April 13, 2009. More here.

  4. There is already the Streamlined Sale Tax Project.

    See http://www.streamlinedsalestax.org/

    Which has been implemented by a number of states and appears to be gaining traction as the national solution to this issue.

    The SST will not make it easier on any retailer since taxes are collected based on the delivery location. This will require every retailer to have knowledge of the tax rates and tax exemptions of all jurisdictions in the US.

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