It all started with New York and the now infamous ‘Amazon’ tax. New York was the first state to decree that if you had an NY affiliate who received a referral fee for selling your product, then that was enough to mean you had nexus.
Nexus means connection. And that connection meant that you were now responsible for collecting New York sales tax. So, what if you live in Texas, ship from Texas and sell to a Texas customer? You collect Texas sales tax, right? Well, New York says if you have a New York affiliate help you with the sale, you’re supposed to collect New York sales tax. It’s a mess. And that’s why Amazon challenged the law in New York court. And lost.
So Amazon and other websites cancelled their contracts with affiliates who lived in the state of New York. In effect, if you live in New York, you can’t be an affiliate marketer.
Other states have joined in on the bandwagon with both Rhode Island and North Carolina passing ‘Amazon’ tax laws.
Other states, now desperate for money, are talking about adding their own version. Most of these would go into effect, if passed, by June or July of this year.
Colorado * (if passed, will come into effect March 1st)
Mississippi just defeated their version of the ‘Amazon’ tax. Nevada’s governor is talking about his new budget plan that will include a version for Nevada.
Remember too if you have a website, then you need to be careful if you have affiliates in any of these states. You’ll need to start collecting sales tax on any sales that they help with. Most likely, it’s easier to just go the route of Overstock.com, Amazon.com and other big Internet businesses and cancel the affiliates in these states.