All about the "Amazon tax"
For anyone who isn't aware, many state legislatures are fighting massive revenue shortfalls and are eying taxes on Internet sales as an easy target.
This actually isn't a new tax. If you make an online purchase, you're supposed to note this on your tax form and pay sales tax at the end of the year. But nobody does it. Hence the incentive for legislatures to go after it. And while it may not technically be a new tax, the reality is that it's more money going out of your pocket and into government coffers.
And then there's the other side of the argument, coming from e-commerce giants such as Amazon. They don't want to have to track sales tax rates in 50 states and hundreds of municipalities, nor do they want to subject themselves to audit by that many jurisdictions.
Stuck in the middle
In between these two camps are "affiliates." That's folks like me with websites that link to Amazon and other e-tailers. I have a site where I review GPS units, cover industry news and offer tips about using these devices. I get a small percentage of each sale when you visit one of these online merchants (and make a purchase) via a link on my site. It's not a way to get rich quick, but I've built it up into a full-time gig. Lest you think it's easy money, I've been at it for four years and there are times I work 80 hours a week, but hey, I like what I do.
WTF is nexus?
Here's the rub. Amazon doesn't have to charge sales tax in states (like NC) where they don't have a physical presence. But state legislatures like North Carolina's are defining "affiliates" (that's me), as a physical presence like a store front or warehouse. Because I link to Amazon. Creative, huh? They call this "nexus," basically a tie that binds. If you want to read the legalese, it's runs from line 42 on page 268 to line 18 on page 269 in NC Senate bill 202 (PDF).
Blackmail or smart business practices?
So Amazon says, as soon as this passes, we're going to cut off all affiliates in your state. Ha! No nexus! Then you can't force us to collect sales tax! Oh wait; that means website owners like me no longer get paid. Did I mention that I do this full time, depend on this revenue, have a family and don't want to be homeless? And there are folks out there who may be in worse shape -- like the mom with a 5 year old mentally handicapped son she must stay home to care for. Affiliate marketing allows her to do so.
Now the legislators say hey, we're being blackmailed! But Amazon isn't opposed to taxing online purchases. As a matter of fact, they support the...
Streamlined sales tax project (SSTP)
The SSTP is a collaborative effort of 44 states to pave the way for taxation of online purchases. According to the state legislators I've spoken to, implementing this requires an act of Congress, which the Supreme Court cleared they way for in Quill vs. North Dakota. North Carolina is a full member of SSTP, but apparently they have gotten tired of waiting for Congress to act. I'll be looking into this more, but I'm betting Congress really doesn't want to pass an Internet tax law. Talk about unpopular! Can you blame them?
In my next post, I'll share my experience meeting with state legislators on this issue.
To fight this legislation in NC, call your legislators and tell them you are opposed to the Internet tax provisions in S202. And sign this petition.
