Indiana and Florida Face Prospects of Affiliate Nexus (Amazon) Tax

In the course of this week, two states have already made moves towards jumping on the “affiliate nexus tax” bandwagon, joining the nine which have ratified such laws in the past few years.

Indiana (news of February 4, 2013): and other online-only retailers would have to start collecting Indiana’s 7 percent sales tax this summer under a bill approved overwhelmingly by the Indiana House.

The bill approved by a 79-18 vote on Monday would negate an agreement between Amazon and former Gov. Mitch Daniels that gave the company until next year to start charging the sales tax.

…The bill now goes to the Senate for consideration. [source]

Florida (news of February 5, 2013):

In a 10-1 vote, the Senate Commerce and Tourism Committee today endorsed a bill that would require out-of-state retailers to pay taxes on Internet sales to Floridians.

…While the bill has support in the Senate, the question remains how it will be received in the House, which has been more resistant to the issue. [source]

Not surprisingly, the focus is again heavily on Amazon. However, just as in the other states where such laws were enacted, (a) it isn’t Amazon, but in-state consumers who will have to pay the tax, and (b) it isn’t Amazon (alone) who will suffer, but thousands of small businesses [see my article on it here] that Indiana- and Florida-based affiliate marketers run.

I have just analyzed an affiliate database in an established affiliate program that I manage; and in a 7-year-old program, affiliates from Indiana and Florida represent 1.7% and 9% (of the whole number of affiliates aboard) respectively. This amounts to nearly half a thousand of small businesses; but this is only in one fairly niche affiliate program.

4 thoughts on “Indiana and Florida Face Prospects of Affiliate Nexus (Amazon) Tax”

  1. This one should be a concern to the industry for sure as Florida is a biggie in terms of affiliate count and revenue generated in a lot of programs. Our affiliates at Fanatics are fortunate, and wont be affected as we’re Florida based and already collecting tax on sales made in state, but I’m worried about the livelihood of Florida based affiliates that will soon start getting pink slipped by out of state merchants if the tide can’t be turned, a Federal solution reached, or a Affidavit workaround crafted.

    1. Continuing with my above-quoted example, the number of Florida-based affiliates in the program that I was analyzing is, actually, larger than their number in any of the other nexus tax states. It is, in fact, larger than all our California and New York affiliates combined. Should the FL bill turn into a law, the effect may be drastic.

  2. Pingback: Marketing Day: February 6, 2013

  3. The State of Minnesota also has Affiliate Nexus on the table and with a Democratic super majority it will likely pass. The effort here has been beaten back for the past two years lead by the PMA, however this year the PMA isn’t engaged and Amazon reportedly hasn’t hired a lobbyist as they have in the past. A recent Survey USA poll of Minnesotans reflected a 61% unfavorable regarding online purchase taxation. Small retailers, Best Buy, and Target both headquartered in Minnesota are lined up pushing this under the guise of “fairness”. In this affiliates opinion the motivation is fear of Amazon, and I doubt this will impact the consumers desire for the convenience of online shopping. It’s an age old tactic to cry “unfair” when you can’t compete on the basis of your value proposition.

    A National solution is desperately needed by the thousands of Affiliates that are being plowed under by State Governments that can’t control their appetite for spending.

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