Fighting the Amazon Tax

Several states are actively considering following New York’s lead in trying to apply sales tax to online purchases: the “Amazon tax”. These new laws seek to establish a “nexus” for tax purposes that relates to the location of the affiliate or publisher, rather than to that of the advertiser or merchant. This is a big deal for affiliates, with many fearing that since sales tax varies by state, merchants will find it impossible to maintain affiliates across the entire country and will cut back numbers accordingly.

California is where the action is hot and heavy, with AB178 due for a hearing on 13th April. The newly formed Performance Marketing Alliance is leading the charge against this initiative with an online group letter available for CA residents and a lobbying day to be held in Sacramento at the end of March.

Minnesota is considering similar legislation and may be even further along in the process. Melanie Seery has been writing about the Amazon tax since last year and is trying to rouse the pitchfork-wielding hordes to combat SF282: the Minnesota Affiliate Sales Tax bill.

These are good and well-intentioned campaigns but at a time when tax revenues for states have dropped through the floor and posturing senators are refusing to accept stimulus monies, it is hard to see how any state, and especially California, will be persuaded not to emulate New York.

The age of the tax-free Internet is coming to an end. Let’s all fight AB178 and SF282 to the best of our abilities. Hawaii’s HB1405 too. And then the others that will follow.

But then we’re probably going to have to get behind a standard, nationwide sales tax that levels the playing field for affiliates, simplifies administration for merchants and keeps online sales growing as one of the drivers of the economic recovery. Senator Enzi of Wyoming has a draft bill, but getting it onto the lawbooks is going to be a long and difficult process.