Help us Lobby Against CA AB 178 - Affiliate Sales Tax

[Linda Buquet]

For the past 2 weeks I have been in communication with the California Taxpayers Association who along with the California Chamber of Commerce has formed a coalition to lobby against California Bill 178, a proposed new law that is similar to the New York "Amazon" tax. <strong>Major corporations and trade associations in the music and electronics industry are involved in the coalition to lobby against this bill. Joining forces with them is our best chance of fighting this, as these players are much bigger and have more clout than our little industry. </strong>

CalTax reached out to me, the PMA and several other industry leaders, so now the affiliate marketing industry has our own joint coalition led by the <a href="http://www.performancemarketingalliance.com/">PMA</a>, our industry association. Our point person is Beth Kirsch, formerly a federal lobbyist.

Among the coalition plans are letter writing campaigns, a lobby day at the capitol on March 31 and mobilizing people to testify before the Revenue & Tax Committee on April 13.

Rebecca at the PMA asked me to re-blog this, so here are more details and a call to action for anyone in CA to get involved to help fight this important fight.

<strong><a href="http://www.performancemarketingalliance.com/2009/03/19/the-fight-against-california-assembly-bill-178/">The Fight Against California Assembly Bill 178</a> California Bill 178 threatens to change the performance marketing playing field. If you are a publisher or agency whose business is in California, your livelihood is at risk.</strong>

This bill, copying a similar one in New York, unfairly categorizing publishers as sales presence for out-of-state advertisers. This means taxes will be levied on out-of-state advertisers, potentially causing them to shut down their publisher relationships in the state (it happened in New York). Learn more at <a href="http://www.performancemarketingalliance.com/">The Performance Marketing Alliance</a>.

With your help, we have a great chance to kill this bill: the PMA is working with the California Chamber of Commerce and the California Taxpayers Association lobbying groups to fight this bill. These groups have successfully killed similar bills in the past, but the difference now is the precedent set by New York state. They believe the only way this bill can be killed is to have a coordinated grass-roots effort that demonstrates the devastating effect this bill will have on performance marketers in California.

With the support of CalChamber and CalTax, PMA is launching a coordinated grass-roots campaign that targets congressional representatives. We are developing an attack plan that includes sample letters, fact sheets, congressional contacts by zip code, and a ?Visit Sacramento? day, to put faces in front of decision makers.

First step: The PMA is extremely fortunate to have the support and experience of Beth Kirsch, a well known industry leader who was formerly a federal lobbyist. She is leading our effort, but we need your help. We are looking for California performance marketers to get involved. The most seriously impacted are California publishers and OPMs.

We don?t have much time - we have until March 31st to make an impact.

<strong>As we learned from our colleagues in New York, the passage of this bill could have devastating effects on California performance marketers. If this passes in California, it virtually assures a firestorm of adoption by other states, which could devastate our entire industry. If we beat this bill, it will severely limit the adoption in other states.</strong>

Email me (rebecca AT performancemarketingalliance.com) if you are interested in helping with the fight. At the very least, please forward this link to your Californian friends.

 

[Joseph Ratliff]

What's really funny is commissioned sales people offline don't pay sales tax. They only pay the required taxes that even affiliate business owners pay.

This is "Big Brother" trying to find an angle again.

 

[Linda Buquet]

CA Affiliates,

We are having a lobby day at the Capital on March 31st. If you want to help, let me know and I can put you in touch with the organizers.

We also are trying to collect as many CA affiliate marketer's signatures as possible for a big group letter.
I'll let you know when the letter is up and ready for sigs. Should be today or tomorrow.

Also of note, Hawaii had their hearing on a similar bill yesterday and it passed. :-(
Minnesota has their hearing on Thursday.

This is spreading like wildfire! But we have a chance to stop it in CA - a similar bill was stopped last year. If we can stop CA, hopefully it will prevent other states from starting action.

 

[fitnfree]

Hawaii had their hearing on a similar bill yesterday and it passed.

Oh brother, no, that is NOT good news. Go CA!!! That would be a huge one to halt and could send a strong message. pulling for you - and for ALL of us!

 

[Linda Buquet]

Urgent: California Affiliates - Group Letter Opposing AB 178

If you are an affiliate marketer whose business is in California, your livelihood is at risk! California Assembly Bill 178, is a sales tax bill that threatens to change the affiliate marketing playing field. This is no longer just a California issue - it?s an industry wide issue. If this bill passes in California, a firestorm of bills are sure to follow in other states. (<a href="http://affiliate-blogs.5staraffiliateprograms.com/2645/warning-new-affiliate-sales-tax-problems-minn-conn-hawaii.html">Other states</a> already have pending legislation.)

On behalf of the PMA and all the affiliate marketing industry leaders that are heading up the coalition to lobby against CA AB 178, <strong><a href="http://www.performancemarketingalliance.com/california-assembly-bill-178/sign-our-group-letter/">I urge you to take action</a>!</strong>

<strong>If you are a CA affiliate, merchant, network or OPM we need you to sign this group letter opposing the bill which could cost affiliates their businesses.</strong>
<h3><a href="http://www.performancemarketingalliance.com/california-assembly-bill-178/sign-our-group-letter/">Please click here, to sign the group letter opposing AB 178</a></h3>
We need your support to fight this bill that will hurt our industry & YOUR bottom line! We CAN make a difference and stop this bill. A similar bill was vetoed last year. WITH YOUR SUPPORT we can stop this bill again. <strong><a href="http://www.performancemarketingalliance.com/california-assembly-bill-178/sign-our-group-letter/">Please sign it now</a>!</strong>

If you?d like to get more involved we have a <a href="http://www.performancemarketingalliance.com/california-assembly-bill-178/">multi-faceted lobbying campaign</a> and could use your help on various efforts. <strong>But the 1st and the easiest thing we need from you RIGHT NOW, <a href="http://www.performancemarketingalliance.com/california-assembly-bill-178/sign-our-group-letter/">is your signature</a>.</strong>

<strong>P.S.</strong> If you are a network or have a list, please pass this on, blog or tweet it. We really need the support of every affiliate marketer in California that we can get word out to.

Thanks in advance for your help!

 

[undoIT]

This bill must be stopped. I have signed on at Performance Marketing Alliance and will be doing what I can to make sure this doesn't pass.

 

[Linda Buquet]

Thanks fitnfree and undoIT!

 

[undoIT]

I have a question on this. Since CJ is located in California, would their presence be considered a nexus, or does this only apply to publishers?

 

[Linda Buquet]

I don't believe so since they don't sell to the consumer and are only a middleman between the merchant and the affiliate. But the wording is so broad right now it's hard to say how it could be interpreted.

 

[Linda Buquet]

Several people went to the capital and lobbied in person against the bill yesterday.
Karen from GTO has the story.

<a href="http://gtomanagement.com/ab-178-lobby-day/">AB 178 Lobby Day</a>

 

[ETRdahir]

This is a shakedown!! Other states will follow suit if the law is passed in California which just scares the hell out of me. Is it true that merchants will be responsible for collecting sales tax from an affiliate once they have reached commissions of $10,000.00 in there state with that merchants affiliate program?

 

[Linda Buquet]

"Is it true that merchants will be responsible for collecting sales tax from an affiliate"

No that's not how it works at all. Affiliates don't make sales and collect money so they don't pay sales tax.

The merchant has to start charging sales tax to the consumer and then pays it to the state. But the merchant's don't want to have to increase their cost to the consumer if they don't have to, so some will just drop affiliates so they don't have to charge sales tax.

 

[ETRdahir]

Thanks for clearing this up Linda.

I guess the world is flat in this case since Merchants will have to increase their international presence to get around this.

 

[ETRdahir]

So since I'm a merchant I would have to register with the State that has enforced this new taxation and charge sales tax on our product that are sold in that state, is this correct??



Regards,

 

[undoIT]

This is a shakedown!! Other states will follow suit if the law is passed in California which just scares the hell out of me. Is it true that merchants will be responsible for collecting sales tax from an affiliate once they have reached commissions of $10,000.00 in there state with that merchants affiliate program?

No, it is worse. It is not commissions of $10,000... It is gross receipts of $10,000 or more:

This bill would include in the definition of a "retailer engaging in business in this state" a retailer entering into an agreement with a resident of this state under which the resident, for a commission or other consideration, directly or indirectly refers potential customers, whether by a link or an Internet Web site or otherwise, to the retailer, if the cumulative gross receipts or sales price from sales by the retailer to customers in this state who are referred pursuant to these agreements is in excess of $10,000 during the preceding 4 calendar quarterly periods, except as specified.

AB 178 Assembly Bill - INTRODUCED

If this bill passes in California, I will be moving to another state immediately. If it comes down to it, I will be leaving the states altogether. This country is going downhill fast and it may be time to leave any ways.

The bill is completely misguided and it may actually backfire. California needs to set the precedent by shooting this bill down.

 

[Linda Buquet]

So since I'm a merchant I would have to register with the State that has enforced this new taxation and charge sales tax on our product that are sold in that state, is this correct??

Only if you have 10,000 in cumulative yearly sales BY Ca affiliates sold TO Ca residents.

That's part of the concern - if you are going through a network it makes it hard to even figure out. You know where your end sales are made, the network knows which affiliates are in CA but how do you tie together the data to track that affiliate 257 made the sale to customer 1,254?

Even if you have an in-house program it will be hard to figure out if you meet the threshold if you have a fairly small program. If you are doing pretty big sales volume through the affiliate channel, then chances are you meet that threshold.

 

[Linda Buquet]

If this bill passes in California, I will be moving to another state immediately.

While I agree the bill is misguided and I'm totally against it, if I was a full-time affiliate in CA, I would not move just because it was passed. Lots of merchants won't drop affiliates, there will only be some that will - based on what happened in NY. I think many merchants didn't react at all, either due to being clueless or sticking their head in the sand or were waiting to see if it would be repealed and then forgot about it.

So it will only have a major impact on your income if a majority of merchants that you currently work with drop their affiliates. There are typically several merchants in a market, so you should be able to find other merchants in your niche that you can work with.

 

[Linda Buquet]

I just found out that the hearing has been pushed back from April 13th to April 27th, which gives us a little more time to lobby.

 

[undoIT]

I just found out that the hearing has been pushed back from April 13th to April 27th, which gives us a little more time to lobby.

Nice! Let's beat this bill. Moving out of Cali is a bit extreme. Perhaps it would be good to wait and see how many advertisers cancel and then assess how much income they were bringing in, if the the bill is passed. Hopefully none of us will have to deal with this.

 

[undoIT]

This affiliate nexus BS is back in the CA budget tax bill and could be voted on next week. Here is the email I got from CJ.

Dear California Publisher,

ALL HANDS ON DECK! California's budget tax bill now includes "affiliate nexus" language and could be voted on as early as next week! Commission Junction is opposed to the internet retail tax and this language in general, and we strongly encourage you to send a letter of opposition to Senator Denise Moreno Ducheny (senator.ducheny at sen.ca.gov). But don't stop there:

* Navigate to the California State Assembly web site
* Use the "Find My District" link on the left of the home page and then type in your address and zip code to find your district number. Close that window.
* Use the "Assembly Roster" link on the home page to find links to email your assembly member.


We encourage you to use email and phone calls to express your opposition.

Please visit this page:

Commission Junction - News & Events

and scroll to the California Internet Retail Tax section to find a template you can use and modify accordingly for your email as well as the Senator's email address.

Let's join together to oppose this bill!


Sincerely,

The Commission Junction Team