Supernatural Agency: Online business tales

May 30

The beginning of the end for affiliate marketing?

Rants, affiliates, e-commerce, google, marketing, monetization Add comments

We’ve had three major brands for whom we are affiliates end their relationships with us because we are located in NY State. Never mind the fact that our servers are somewhere on the West Coast and that these retailers have no brick and mortar presence in NY. Our totally dysfunctional and short-sighted state government decided that out of state e-commerce companies selling on the web in NY should pay our insane (8.5%) sales tax even though the law for mail order companies states that they don’t have to charge the tax as long as they have no physical presence in the state.

Apparently a website that does not even sell the products and does not physicaly exist here is now a cause for ordering merchants to pay sales tax. So, what about the millions of paper mail order catalogs sent into our mailboxes from out of state companies- aren’t they a physical presence? And since when are online media that advertise services on a commission basis (very common in print, radio and broadcast) a cause for claiming a physical presence?

I do not think this will hold up in the courts as it is a poorly though-out law filled with loopholes. In the meantime don’t plan on building an affiliate marketing business in NY.

Update: Two more merchants have sent notices specifically detailing that the NY law was the reason they were removing us, hopefully temporarily (as they said). Interestingly, Linkshare followed with a generic notice saying we had been removed for unstated reasons- I think they’re worried about losing a lot of other merchants if they get wind of this.

So, if Google has PayPerAction (PPA) programs in which they get paid when a conversion takes place should they be paying taxes? They have a big physical presence in NY.

This is the lid coming off a big can of worms…

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The beginning of the end for affiliate marketing?

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