Affiliate Marketing & Programs

Top Affiliate Marketing Stories of 2011: The Nexus Tax That Wasn’t


Top Affiliate Marketing Stories of 2011: The Nexus Tax That Wasn'tOver the next few days, we’ll be recapping some of the top affiliate marketing stories of 2011.

One of the stories that captured the interest of affiliate marketers across the United States was the risk of losing their business to their state legislature’s nexus tax.

The nexus tax, which the Performance Marketing Association describes as a tax on affiliate marketers, is often interpreted as a play by greedy state governments to destroy the entrepreneurial spirit of affiliate marketers and the retailers that rely on them. The nexus tax, also called an affiliate tax, makes online retailers responsible for collecting sales taxes in any state where they have active affiliate marketers selling their products.

State sales tax rules, which have traditionally allowed out-of-state retailers to operate in another state without the burden of taxation, have been turned upside down.

Here’s a selection of the stories that best capture the challenges faced by affiliates who fought this tax over the course of the year. Cuts Ties With Illinois Affiliates Over Tax Law – On March 10, Amazon announced that it was severing ties with affiliates in Illinois, citing a law that imposes taxes on consumers who make online purchases.

Arkansas Introduces Affiliate Tax Legislation– About the same time, Arkansas considered the same small-business-killing legislation.

Texas’s Anti-Small Business House Bill Gets a Compainion Bill in the Senate – On March 19,  Shawn Collins reported on the Texas Legislature’s attempt to enact an affiliate tax in the Lone Star state.

Texas Affiliate Marketers March on Austin – On March 28, affiliate marketers marched in Austin to prevent the affiliate tax from taking place.

Amazon Associates Program Terminated in California – In late June, we reported when sent an email to all California residents who participate in its affiliate program. This email notified 25,000 of Amazon’s California affiliates of the impending termination of their affiliate contracts by Amazon.

Amazon vs. the California Affiliate Nexus Tax – On July 21, the California Attorney General’s office approved a petition for a referendum that would give voters a chance to overturn the nexus tax.

Amazon Fights Back Against California Nexus Tax – In late July, Amazon continued its offensive against California’s attempts to tax affiliate marketers.

Jerry Brown Repeals Affiliate Tax, Amazon Preps for Next Round – On October 10, we reported that California tabled its nexus tax legislation. Affiliates went back to work. But affiliates in Connecticut faced another battle.

Amazon Backs Sales Tax Reform – After a challenging 2011 for the Amazon Associates Program, which was shutdown in California in response to the state’s demand for an e-commerce tax, it appeared the Seattle-based company is going on the offensive by advocating for national sales tax reform.

Is national sales tax reform the only hope to end this series of battles over affiliate taxes? Let us know what you think in the comments.

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