Killing the Affiliate Nexus Tax Dead!

Killing the Affiliate Nexus Tax Dead

Affiliate Summit EastAugust 2011

Moderator◦Scott Allan

Vice President of Marketing, LinkShare

Panelists

◦David L. AndreFounder and Chairman, Cartera Commerce

◦Rebecca MadiganExecutive Director, Performance Marketing Association

◦Matthew Schaefer, Esq.Partner, Brann & Isaacson

Introductions

Affiliate Nexus Tax

Amazon Tax

Click-Through Tax

E-Fairness Act

Main Street Fairness Tax

Advertising TaxInternet Tax

Streamlined Sales Tax

Interstate Commerce

Physical Presence = NexusNo Physical Presence = Not Required to Collect Sales Tax

What Constitutes Physical Presence?

States that have adopted Affiliate nexus laws:

New York North Carolina Rhode Island Arkansas Connecticut Illinois Vermont* California

In addition, similar bills have been introduced in other state legislatures

Several States Pass “Amazon Laws”

Grassroots SuccessFailed in 32 States, Passed in 8

No Law

Passed

Mass Retailers Association launched major PR and legislative campaign in Q1.

Immediately sought advice from colleagues at PMA and super-affiliates in Illinois.

The three largest affiliates in MA organized, engaged a top lobbyist and PR firm.

After a major effort we were able to bottle the bills in the Finance Committee, and avoid an end-run where the language was slipped into the budget process.

Second-level defense: A major education effort to key legislators, leadership, governor’s office and administration.

Massachusetts Case Study

Get the best advice possible.Research what lobbyists have clout.

Organize and fund a coalition.Budget for a long-term effort.Assign a credible spokesperson.

Fight the legislative front to win.Fight the PR front for parity.

Engage the opposition.

Focus on simple messages.This bill won’t work. Job loss. Revenue loss.

Engage associations. (i.e. New England VC Association)

Engage broad network of affiliates and employees, yet use them judiciously.

Massachusetts Learnings

The PMA has filed suit in Chicago challenging the Illinois affiliate nexus law, HB 3659

The PMA alleges the law unlawfully targets online performance marketing

It violates the Commerce Clause of the United States Constitution

And the federal Internet Tax Freedom Act

PMA Challenges Illinois

HB 3659 uses the relationship between Illinois publishers and out-of-state advertisers to impose a use tax collection obligation on Internet retailers located outside the state

Under HB 3659, the display of online advertisements on the websites of Illinois affiliates where compensation is based on sales can create nexus for an out-of-state retailer

Retailers using other forms of national advertising are not, however, required to collect Illinois use tax

HB 3659: Affiliates are the Nexus “Hook” For Internet Retailers

Amazon and Overstock challenged the New York web affiliate law

State intermediate appellate court concluded that the New York statute did not violate the Constitution on its face

Court rulings inconclusive - further judicial proceedings are underway

New York Litigation

Alternatives

California Referendum

Alternatives

Durbin Bill

Alternatives

Model Legislation

A big issue for small-medium internet retailers!

Spend time on this - make sure the executives at your company understand the importance of the issue

Organized campaigns are successful

Disorganized campaigns are easy targets for the opposition!

Not Just an Amazon Issue

Stay informed Attend grassroots events! Sign petitions Call and write to your

legislators

Get Involved!

www.performancemarketingassociation.com

Thank You!

Dave AndreFounder and ChairmanCartera Commerce, Inc.

[email protected]

Matthew Schaefer, Esq.Partner

Brann & Isaacsonwww.brannlaw.com

[email protected]

Rebecca MadiganExecutive Director

Performance Marketing Associationwww.performancemarketingassociation.com

[email protected]

Killing the Affiliate Nexus Tax Dead!

Business

Transcript of Killing the Affiliate Nexus Tax Dead!