Affiliate Tax Destroys Business
An issue impacting the ecomerce world is collecting tax online. According to a U.S. Supreme Court decision, a web-only retailer can be required to collect sales tax from residents of states where the retailer maintains a physical location. Recently an affiliate tax laws (Amazon Tax) is taking place, which require retailers to collect sales tax. For instance, New York, Rhode Island and North Carolina require Internet retailers to collect sales tax from instate customers as well as in state affiliates, which promote their products in those states.
Companies such Overstock state that unless laws change in North Carolina, New York and Rhode Island that they will no longer have affiliates in those states. In addition, Overstock finds it poor business to continue accepting sales hundreds or thousands of affiliates in those states. Furthermore, Overstock argues that tax has impact on online customers scaring them away.
New York was intended on raising tens of millions of dollars in tax revenue that they contend would go uncollected roughly more than $70 million. Overstock and Amazon have appealed a court decision that upheld the New York Law.
In our opinion, affiliate tax destroys business and impacts communities. The affiliates will get cut out and have to layoff workers impacting the local economy. Affiliates will have to move to survive. Let the private sector run ecommerce trade and leave the state out of the affiliate tax law. For example,California supported affiliate businesses in vetoing the affiliate laws. Another instance, Hawaii sided with the affiliate businesses. Furthermore, the National Retail Federation opposes the state affiliate laws.
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