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NY state tax law & affiliates

Posted by Michael Bloch in ecommerce (Wednesday May 21, 2008 )

If you run an affiliate program with affiliates who are based in New York State, the government there may be wanting a piece of your action through their new sales tax laws.

Here’s a quote from the ruling which determines eligibility for forcing online companies to collect state sales tax, even if they have no physical presence in New York State:

“The cumulative gross receipts from sales by the seller to customers in New York State as a result of referrals to the seller by all of the seller’s resident representatives under the type of contract or agreement described above total more than $10,000 during the preceding four quarterly sales tax periods. (Sales tax quarterly periods end on the last day of February, May, August and November.)”

As a result of this, rumor has it that some major merchants are now dropping their New York based affiliates. This seems a bit like throwing out the baby with the bathwater but I can understand some just not wanting the extra headaches and potential liability. Amazon has already filed suit challenging New York State’s new law.

The full text of the law can be viewed here (PDF) and if this may affect you, seek your accountant’s counsel for clarification.

My response to the New York tax department is probably best summed up by the Monty Python team in the skit below; entitled “A French Taunting”. Enjoy.

Monty Python, like oysters, is somewhat of an acquired taste :)


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