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internet marketing
amazon affiliates
brick and mortar stores
brick and mortar
affiliate marketers
traditional brick
walmart
What Is In Store For Internet Marketing?
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Steve Painter is a reporter for the Arkansas Democrat Gazette, the state’s largest newspaper. For the Business & Farm section of the May 15 Sunday edition, he wrote an article entitled Retailers Ending Online Affiliations, which described the potential effects to Arkansas affiliates of a new Arkansas law passed this year and signed by the Arkansas governor that will take effect on October 24 of this year. Act 1001 will require out-of-state retailers to collect Arkansas state and local sales and compensating use taxes if the out-of-state sellers have Arkansas-based affiliates.

Overstock has already ended its contracts with their Arkansas-based affiliates. Amazon is likely to follow suit between now and October 24, 2011, as they have done with their affiliates in Illinois, North Carolina, Connecticut, New York, and Rhode Island. Those states have passed similar legislation to Arkansas’ Act 1001. The big question is what states will be next?

It is interesting that Arkansas-based Walmart already collects sales and compensating use taxes for all 50 states. Of course, doing so adds to their overhead, because they have to have the personnel and software to track their online sales and make payments to each of the 50 states. However, commissions to their affiliates are worse then Amazon's Will Amazon windup doing the same? And how will that affect commission rates to Amazon affiliates? That remains to be seen.

The impetus for the change in Arkansas’ sales tax law certainly is understandable, at least at one level. Traditional brick-and-mortar stores do collect and pay sales and compensating use taxes to the state. With more and more people choosing to buy online for convenience and to avoid paying sales tax, state sales taxes have diminished leaving a budget short-fall. So how can states avoid operating in the red like California?

Raise taxes? Good luck, Jerry Brown, in getting re-elected! Raising taxes is probably the least good answer. But what about affiliate marketers? It may be easy to under report our online income. Are we cutting our own throats by not reporting all of our income and over reporting our expenses such that states have to resort to tax laws like Act 1001 to operate?

What seems to be a puzzle is the affect on state income taxes as affiliates lose income from out-of-state sellers who drop contracts with affiliates from the above mentioned states. Arkansas state representatives and state senators will be queried about their study of the impact of Act 1001 on state income taxes. If it looks like they have just “robbed Peter to pay Paul”, many are not likely to get re-elected. As far as the current governor of Arkansas is concerned, he has probably lost the vote of every affiliate marketer in the state for his re-election. In fact, anyone who supported Act 1001 can count on a campaign against them. “No brag; just fact.”

Life just isn’t fair,

Shedd McWilliams


Street Talk

Kyle  

In a globalization of buying and selling products, this to me seems like a definite step backwards. More states may try to follow suit but locational earnings by an affiliate should be taxed in that state and earnings by a company sshold be taxed in their state. The principles they are applying to online affiliates do not apply to any other type of affiliation (think real estate, car sales,etc)... So yeah I think this is quite unfair.

Reply
  about 1 decade ago
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