With more and more states facing budget shortfalls, the online affiliate entrepreneur is now being made to pick up the bill and pay internet sales tax. In 2008, the "Amazon Tax” went into effect, affecting affiliates and their current presence while putting a bad taste in the mouth of newcomers to online marketing, trying to prosper in this uncertain economy.
What is Affiliate Online Marketing?
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Affiliate marketing is using one website to drive traffic to another. Sites such as LinkShare and Commission Junction offer online websites banners and links to place on
affiliate web pages. In return when a visitor to the site click on the banner or link and makes a purchase, the person owning the website makes a profit off the item sold. The percentage that an affiliate can make varies depending on which marketing site the affiliate has signed on with.
What is The "
Amazon Tax"?
It was given that name because states such as New York, Hawaii, Rhode Island and North Carolina have decided to levy unconstitutional taxation on
affiliate marketers even though there was no physical business in the state. Amazon and Overstock sued New York and their lawsuits were dismissed. Overstock no longer offers their
affiliate program in New York, Amazon’s decision there is still pending. Two states, California and Hawaii have since vetoed their decision and Overstock re-instated the program in Hawaii, Amazon to date has not.
What Businesses Are Affected?
- Any out of state online seller that signs up a business to make commissions or referral fees for them.
- Online sellers small and large that use other out of state websites to drive traffic to them for sales.
In the months ahead, more and more states will be joining the dreaded "Amazon Tax". Before joining any affiliate program, check with your state first to see if they plan on implementing this law into effect in the future.
According to the United States Constitution, any state cannot levy tax on anyone outside of his or her jurisdiction. The business must have a physical address in order to be subject to paying sales tax. It has always been that way as far as I can remember and I have a great memory.