On Friday, January 22, 2010, Bill HB10-1193 [pdf here], introducing the affiliate tax in the State of Colorado, has been released and referred to the Appropriations Committee. The Committee meeting is going to be held on January 27, 2010.
Here’s an excerpt from the bill:
(II) (A) Commencing March 1, 2010, if a retailer enters into an agreement with an affiliate under which the affiliate, for a commission or other consideration, directly or indirectly refers potential customers, whether by a link on an Internet web site or otherwise, to the retailer, then the affiliate shall be presumed to have solicited business on behalf of such retailer and such retailer is deemed to be doing business in this state. This presumption shall not apply unless the cumulative gross receipts from sales by the retailer to customers in the state who are referred to the retailer by all affiliates with this type of an agreement with the retailer are in excess of ten thousand dollars during the preceding calendar year. This presumption may be rebutted by proof that the affiliate with whom the retailer has an agreement did not engage in any solicitation in this state on behalf of the retailer that would satisfy the nexus requirement of the United States constitution during the calendar year in question. Nothing in this subparagraph (II) shall be construed to narrow the scope of any term for purposes of this article.
(B) For purposes of this subparagraph (II), “affiliate” means a person residing in this state that may solicit business by means of a public forum in this state.
So, plain and clear:
- It’s a bill that applies to all e-tailers who run affiliate programs, and does so as soon as the $10,000/yr in sales generated by CO affiliates to recipients in CO threshold is met
- “Affiliate” is defined exactly the way we define it, and the bill is targeting specifically affiliate marketing programs with affiliates in CO
- The law applies to all affiliates residing in the state of Colorado, whether or not the retailer is located in the state, and it is the retailer’s responsibility to collect/pay the tax due
- All customers (real and potential) count
- If everything goes according to the current plan of CO legislators, the law will come into power on March 1, 2010
It is unlikely that Governor Ritter will veto the bill, as he is rather supportive of the introduction of such a tax. Colorado faces $1.6 billion budget shortfall this year [more here], and the tax is believed to be one of the solutions.
What to Do?
Yesterday night I have received the following email from Stephanie Lichtenstein of the Fight Against the Advertising Tax Facebook group:
Time to get active, and let your voice be heard: both together with voices of other affiliates (as described above), and by contacting your legislators [find yours here] — and fast.
More on the Topic
In addition to the above, I strongly encourage you to study the following links on the subject to be fully informed on what’s going on, and what you can do:
- Colorado Hearing Date by Melanie Seery of Affiliate Advocacy
- Colorado Internet Tax thread on ABestWeb
- Colorado Proposes Advertising Tax by PMA
- Colorado Affiliate Tax Legislation Imminent by Scott Jangro
- Stop the Colorado Advertising Tax NOW! by Josh Todd