New York Affiliate-Based Sales Tax Law - IMPORTANT!

[Linda Buquet]

Must read for merchants!

<strong><a href="http://affiliate-blogs.5staraffiliateprograms.com/index.php?s=New+York+tax"><font color="#ff9933">Complete Coverage of the New York Affiliate Tax Issues Here!</font></a></strong>

Another post from Brian at Shareasale offering some very important advice to merchants.

This tax issue is going to go one of two ways. He explains the 2 possible outcomes and says either way this law goes, you will put yourself at a disadvantage if you decide to get rid of New York affiliates.

<a href="http://shareasaleblog.com/wordpress/2008/05/16/merchants-dont-eliminate-your-ny-affiliates/">Merchants - Don’t eliminate your NY Affiliates.</a>

Merchants please read this before making any decisions about this issue.
Brian makes some really good points.

 

[Linda Buquet]

Several more important issues came up yesterday.

<a href="http://affiliate-blogs.5staraffiliateprograms.com/1494/important-merchants-re-new-york-affiliate-tax-law.html">Important New Info for Merchants re New York Affiliate Tax Law</a>

Also see this!

Heather Paulson has in-depth info from a conference call with New York tax officials. Thanks Heather for sharing all the details with us!
From Revenews:

Interview with Members of the New York State Tax Department | ReveNews

 

[Linda Buquet]

<strong><a href="http://affiliate-blogs.5staraffiliateprograms.com/index.php?s=New+York+tax"><font color="#ff9933">Complete Coverage of the New York Affiliate Tax Issues Here!</font></a></strong>

REALLY IMPORTANT!!!

Linkshare and the DMA will be having a conference call Thursday. Get on the call if you can. Here is the DMAs legal analysis of the law so far.

<a href="http://affiliate-blogs.5staraffiliateprograms.com/1495/dma-new-york-tax-conference-call.html">Linkshare/DMA - Join the New York Tax Conference Call PLUS DMA’s Analysis of the Law</a>

If you are active in this fight you need to get on the conference call Thursday if possible.

 

[Linda Buquet]

Evidently Clickbank is going to start charging NY residents tax. Some affiliates are starting to get this:

This email confirms that ACTION IS REQUIRED to continue receiving your product.

Our records show that the payment information we have on file requires updating your county of residence to accommodate collection of sales tax as required by the state of New York.

To update your county please follow the steps below:

1. Go to the URL:?

2. Enter your order number and email address

3. Update your billing information and click "Update Information."

Somewhere I got the feeling info products were not taxable.
Maybe I'm wrong???

 

[Linda Buquet]

EXTREMELY IMPORTANT FOR MERCHANTS!!!

<a href="http://affiliate-blogs.5staraffiliateprograms.com/1498/merchants-urgent-new-york-affiliate-tax-law.html">Merchants - URGENT Re New York Affiliate Tax Law</a>

I'm rushing off for a meeting with the largest Internet attorney to see if he can help us with this issue. Check the 5 Star blog for more important info I have, as soon as I can find the time to blog it.

SPREAD THE word and pass merchants the link to the blog post above.
Super important!

<strong><a href="http://affiliate-blogs.5staraffiliateprograms.com/index.php?s=New+York+tax"><font color="#ff9933">Complete Coverage of the New York Affiliate Tax Issues Here!</font></a></strong>

 

[Linda Buquet]

I've made TONS of edits to that post as new issues and different legal viewpoints surface.

I had a REALLY long talk with the Internet attorney so here?s an update.

<strong><font color="#ff9933">UPDATE 1:30 PM: INTERPRETATION OF THE TSB as it Relates to Affiliate Links: Just had a very long detailed conversation with John Dozier Esq., Managing Partner of </font><a href="http://www.cybertriallawyer.com/"><font color="#ff9933">Dozier Internet Law</font></a></strong>. John is one of the leading Internet attorneys out there, understands affiliate marketing and has handled numerous affiliate marketing related cases on a variety of issues. We went over the TSB in detail and the way he reads it, is not as clear cut as it was when we discussed it on the DMA call.

If you carefully and critically read every place in the TSB doc that mentions advertising or placing links, some of the information even sounds contradictory. In some places it sounds as if they are saying regular advertising links are not a problem, but affiliate links are because compensation is based on a pay per sale model. So many potentially problematic issues came up and everything is all based on interpretation because it's not clearly written. The bottom line too is, this TSB document is not the law and is not binding. It's only an attempt to clarify and explain the law and is subject to change.

<strong>SO ALL THAT SAID: If I were a merchant I would not try to figure it out,
<a href="http://www.cybertriallawyer.com/">I would contact John right away</a> to get some help. I would maybe also go ahead and do the TOS changes to be on the safe side. BUT REALIZE that simply changing your TOS in and of itself will not protect you and may not be grounds to rebut. Based on the way NY interprets and enforces the law, just having pay per sale affiliate links even with no other solicitation still could constitute nexus.</strong>

Based on everything that happened on those 2 calls and the fact that there are a ton of other issues people haven't even thought about yet... I'm going to say this is WAY more complicated than people realize and there are a bunch of loopholes and gotchas. I wish I had recorded and was able to share both calls with you, so you could hear 1st hand the viewpoints from 2 very knowledgeable lawyers.

I will continue to report on news as I find it, but for me to try and explain complicated phone calls with attorneys and translate interpretations of this law this when I'm not not a lawyer, is just really not a good idea. <strong>You just need to get a really good lawyer that understands affiliate marketing, Internet marketing and tax law!</strong>

<strong><a href="http://affiliate-blogs.5staraffiliateprograms.com/index.php?s=New+York+tax"><font color="#ff9933">Complete Coverage of the New York Affiliate Tax Issues Here!</font></a></strong>

 

[Linda Buquet]

Dozier Internet Law: 10 Tips for New York Affiliate Tax Problems

Yesterday, I took it on myself to contact a leading Internet attorney - John Dozier Esq., Managing Partner of Dozier Internet Law. As I searched for an attorney to reach out to for industry assistance on this New York Tax law, one of the reasons I selected John is his in-depth background dealing with a variety of lawsuits and cases in the affiliate marketing space. I wanted someone that understood our industry.

ANOTHER MUST READ FOR MERCHANTS!
Top Ten Tips To Manage New York Sales Tax

PLUS>>>

<strong>FURTHER ACTION: A group industry leaders and I are in direct communication with Jim Connolly, Staff Attorney in the Office of Counsel to the Tax Department of the State of New York. We are pulling together a list of important questions in order to get clarification on numerous issues. Jim has agree to answer the questions publicly. There are many gray areas and much of the language is unclear, so this should help everyone a lot. If you have questions please post them HERE and we'll include the most relevant ones in the list that goes to Mr. Connolly. Additionally, there is a chance John Dozier could possibly weigh in on some of the questions you post here at 5 Star.</strong>

 

[Linda Buquet]

Lots more important info from yesterday's blog. Sorry didn't
have the time to add it here, but if you are affected by this issue you need to be reading my blog because it has all the details and is continuously updated not only by me but through comments from others in the industry.

<a href="http://affiliate-blogs.5staraffiliateprograms.com/1503/consumer-backlash-newegg-new-york-affiliate-tax.html">Consumer Backlash Over New York Affiliate Tax Could Hurt Us</a>
Be sure to read the comments from the link link I reference.

 

[Linda Buquet]

I've been super busy on the NY issue and have not had time to totally keep this thread up to date. AGAIN if you want the latest keep your eye on the blog and new comments in the blog.

In a nutshell LOTS of merchants have terminated NY affiliates.
MANY just sent affiliates notice yesterday the 30Th. saying they will
terminated the 31st. NO warning! Affiliates are scrambling to pull links
and replace merchants.

Quite a few are ammending their TOS thinking it will protect them.
I now think that the DMA advice may be wrong and merchants still do not understand the TBS. Understandable since it's so poorly written that even attorneys have differing viewpoints on what it means.

BUT SOME VERY BIG COMPANIES have put out public notice that they are keeping affiliates and avoiding the law by changing their TOS. I would not be surprised at all if NY went after one of the these companies for back taxes to make a statement and scare other merchants into reporting.

HUGE NEWS!
REALLY important update (I know I keep saying that but it is!)
<a href="http://affiliate-blogs.5staraffiliateprograms.com/1512/overstock-lawsuit-new-york-tax-law.html">Overstock Files Lawsuit w/ Supreme Court to Fight New York Tax Law</a>

As I said in my blog, for a variety of reasons this could help us more than the AZ suit. YAY OVERSTOCK.
I gave Overstock a really hard time over dropping affiliates, this move helps a little to make up for it.

 

[Linda Buquet]

I'll be on a panel discussion tomorrow on Webmaster Radio,
talking about the New York Tax Law problems. Here's more info.

http://affiliate-marketing-forums.5...-webmaster-radio-show-tomorrow.html#post34466

 

[Larwee]

TigerDirect deals with the New York tax issue

TigerDirect has stated they will continue to work with affiliates from all states. This would include New York.

I have received an email from TigerDirect in which they tell what they have done that makes them feel as if they are in compliance with the new law.

As you may be aware, the State of New York recently enacted legislation amending New York Tax Law in an attempt to force publishers to collect sales tax on all sales referred by advertisers with business registered in the State of New York.

At this time we are happy to notify you that we will continue to work with all affiliates from all states and that we have taken the appropriate measures to ensure that we are in compliance of the new law.

In accordance with the terms of our Affiliate Agreement ("Agreement"), we may modify any of the terms and conditions contained in the agreement, at any time and at our sole discretion, by posting a change notice or a new agreement on our site and, by continuing to participate hereunder, affiliate agrees to be bound by such revised terms.

TigerDirect now amends Section 2 of the agreement as more particularly set forth below:

Section 2. "Links on Your Site" of the agreement is hereby amended by adding "Neither you, nor any person or entity acting on your behalf, shall engage in any solicitation activity on behalf of TigerDirect other than by the maintenance of one or more links from your site to the TigerDirect site as authorized by this Agreement. Such prohibited additional solicitation activities include, but are not limited to, the distribution of flyers, coupons, and other printed promotional materials; circulation of printed and electronic newsletters; initiation of telephone calls; and sending emails; any of which mention TigerDirect or refer to the presence of a TigerDirect link on your site."

Please note that, effective immediately, all previous versions of the Agreement are terminated, null, of no effect and are replaced by this new version dated June 5, 2008

We appreciate your understanding in this matter and look forward to continue our mutual success with you.

 

[Linda Buquet]

Thanks SO much for sharing that Larry. It's good affiliates know who's keeping affiliates and what TOS are being amended. Although as we said on the call there's a good chance changing the TOS will not be enough to avoid the tax.

So the moves lots of merchant are making could possibly not even offer them the protection they think it will. We hope it does, but are afraid it won't.

 

[James Spinosa]

I have a feeling that TD will still end up having to pay the tax (until Amazon eventually wins ), good to see they aren't pulling an Overstock though.

 

[Linda Buquet]

THe link to the podcast of the <strong><a href="http://www.webmasterradio.fm/Affiliate-Marketing/Affiliate-Marketing-Insider/New-York-Affiliate-Tax-Law-Roundtable.htm">New York Tax issue panel discussion</a></strong> we did yesterday is up at
WebmasterRadio.

Merchants REALLY need to listen because we feel the actions many merchants are taking (like changing their TOS to prohibit other types of solicitation) will not protect them from being liable for the tax.

I am nursing a very ill cat that's been in and out of hospital, ER, etc and needs constant care and needs to go back to hosp tonight. SO I don't have time to type out what I'm referring to. You just REALLY need to listen!

 

[Linda Buquet]

I promised on the <strong><a href="http://www.webmasterradio.fm/Affiliate-Marketing/Affiliate-Marketing-Insider/New-York-Affiliate-Tax-Law-Roundtable.htm">New York Tax issue panel discussion/podcast</a></strong> we had today on WebmasterRadio, that I would blog and link to some of the resources and breaking news stories I mentioned on the show. However, I ended up having to make an emergency trip to the animal hospital. Still having some medical issues over here with my cat, so my blogging is delayed.

One of the things I mentioned on today's radio show was that Peter Bordes, CEO of <a href="http://www.mediatrust.com/">MediaTrust</a> told me about an interview that was just done with Patrick Byrne CEO of Overstock regarding the NY issue. The interview was just published, so I wanted to get this info out to everyone and then will blog about some of news and a recap of the radio show, later when I can.

The inverview with Patrick Byrne from Overstock is over at <a href="http://meetinnovators.com/2008/06/05/patrick-byrne-from-overstockcom/"">MeetInnovators.com</a> and the part that addresses the New York Tax issue is about half way down. Here is a portion of the interview.

<blockquote><strong><a href="http://meetinnovators.com/2008/06/05/patrick-byrne-from-overstockcom/">Interview with Patrick Byrne from Overstock</a></strong>

<strong>"Patrick:</strong> The Supreme Court wisely said that the burden cannot be put on the out-of-state retailer. Therefore, I think New York's law is directly unconstitutional. We're not suing the state for any money. We're suing to enjoin them from ever acting upon this law, and we're trying to get the Court to throw out the law.

We had to drop the affiliates because of the risk of not collecting the affiliate tax and then someday having New York win. We would get dinged for that. So we had to drop the affiliates immediately.

<strong><a href="http://meetinnovators.com/2008/06/05/patrick-byrne-from-overstockcom/">More</a></strong>...</blockquote>
That's only part of the interview so head over to read the rest including more info on what we all can do to help the cause. It's a bit hard to find where the tax part starts. It's over half of the way down.

If you missed the show today it just got uploaded. <strong><a href="http://www.webmasterradio.fm/Affiliate-Marketing/Affiliate-Marketing-Insider/New-York-Affiliate-Tax-Law-Roundtable.htm">Here's the podcast</a></strong>. I have another new story later, as well as a recap of today's show, as soon as I can blog again. Right now my cat that just had surgery needs me...

<strong>Update:</strong> Ended up in the ER with my cat most of the night, big scare and he's still there but doing a little better. May have to go back to hospital in the morning. So I don't know when I'll get time to finish blogging the rest. Just stay tuned and check back.

 

[Linda Buquet]

Wade Tonkin just he did a podcast interview with Clarke Walton of Walton Web Law about the tax issue. I've not had a chance to even listen to the podcast yet, but wanted to be sure my readers know about it.

<strong><a href="http://gtomanagement.com/blog/index.php/gto/podcast-with-clarke-walton-of-walton-web">Podcast with Clarke Walton of Walton Web Law on New York Affiliate Tax</a></strong>

I'm listening to it right now.

 

[Linda Buquet]

NEW YORK MERCHANTS - IMPORTANT. Especially for the merchants that kept your NY affiliates and amended your TOS. Changing your TOS is NOT enough to avoid nexus. YOU need to read this!

<a href="http://affiliate-blogs.5staraffiliateprograms.com/1558/new-york-merchants-new-ny-affiliate-tax-info.html">New York Merchants - Important NEW NY Affiliate Tax Info 7/1</a>

 

[Linda Buquet]

I've been wanting to share with everyone some of the news that came out of the <a href="http://nyaffiliatevoice.com/2008/07/july-meeting-information/">July 28th meeting</a> affiliates had regarding the New York Sales Tax problem. One of the organizers of the event promised to send me detailed info about what happened and what some of the possible solutions are.

In the meantime I was looking for any other coverage about the meeting and found some good info at Melanie Seery's <strong><a href="http://nyaffiliatevoice.com/2008/07/tax-solution-from-nys-meeting/">NY Affiliate Voice blog</a></strong>. <strong>If you are an affiliate or merchant affected by the New York Amazon Tax Law head over the read the full post.</strong>

The group of affiliates, merchants and affiliate managers that met in Albany for the day, was able to secure Mark Klein, of Hodgson Russ Attorneys to provide guidance about the law.
<blockquote><strong><a href="http://nyaffiliatevoice.com/2008/07/tax-solution-from-nys-meeting/">Tax Solution from NYS Meeting</a></strong> "Mr. Klein moved on to the current law and most importantly the June 30 memo from the New York State Department of Taxation and Finance, <a href="http://www.nystax.com/pdf/memos/sales/m08_3_1s.pdf">NYS tax memoTSB-M-08(3.1s)</a>. Within this memo lies the solution for merchants and affiliates. He explained that NYS affiliates can work with out of state merchants as long as the affiliate agrees to what is being called safe practices. This agreement must be in writing, signed by the affiliate and kept on file by the merchant. In short the affiliate must only engage in advertising their sites or specific products but not advertise the merchant direct. The NYS tax department is working on releasing a template for the agreement and I will be sure to link to it so it is readily available."</blockquote>
I'll have more info to pass on just as soon as I get it. <strong>If anyone else has updates from the July 28th meeting or any other New York Tax news, please get it to me. Many people follow 5 Star for the latest news on the issue and I'm trying my best to be a good information conduit.</strong>

 

[Linda Buquet]

Not good news!

<a href="http://affiliate-blogs.5staraffiliateprograms.com/1601/amazon-tax-repeal-new-york-times.html">NY Amazon Tax Repeal UNLIKELY per New York Times</a>

 

[Linda Buquet]

I had made a separate post about this because it was really important. Just realized I should have also added to this thread in case anyone was following it and missed the other post.

<a href="http://affiliate-marketing-forums.5staraffiliateprograms.com/affiliate-industry-events-news/12411-new-york-tax-solution-complete-w-documentation.html">The New York Tax Solution, Complete w/ Documentation</a>