A merchant who is setting up a new affiliate program wrote to me:
I’ve read your new book, and am determined to create a 100% affiliate-friendly program, welcoming affiliates from all U.S. states. I understand that Amazon tax is a problem that many affiliates are concerned about. We are happy to collect the tax, making sure that no affiliate is declined from joining our program based on state residency. Do you happen to have a list of all states that currently require to collect the tax, and how much?
Very commendable approach!!
Just to clarify, for those readers who may not be aware, they are referring to affiliate / advertising tax laws which have been passed in 5 states around the country (New York, Rhode Island, North Carolina, Illinois, and Arkansas), and more states (e.g.: California, Connecticut, South Carolina) are seriously considering similar legislation now.
Ceasing relationships with affiliates — as some merchants have done — isn’t resolving the problem, but only worsens the situation. Therefore, I always advise merchants to collecting the tax instead. In essence, all of the “affiliate tax” laws prescribe collection of an Internet sales tax from online retailers who have more than $10,000 in annual online sales generated/referred by in-state affiliates. The exact tax percentage differs depending on the state, and presently looks as follows:
- New York — 4.00%
- Rhode Island — 7.00%
- North Carolina — 5.75%
- Illinois — 6.25%
- Arkansas — 6.00%
I applaud the above merchant’s desire to create an affiliate-friendly program from the very outset. I hope w’ll see more and more of this in the future.