Have “Amazon Taxes” Benefited Any States?
For the past month, I’ve been trying to find evidence of any benefits earned by states which have enacted an Advertising-Nexus Tax Law (“Amazon Tax”). Even after appealing for help from many sources, I’ve failed to identify any benefit. Except for New York, no states have collected any additional sales taxes due to these laws, which have reduced the states’ income-tax revenue and jobs.
To date, I’ve only been able to identify one merchant who began collecting any state’s sales tax after enactment of this law: Amazon made a strategic decision to “collect the tax and sue” in New York, after its retroactive enactment of the law in 2009. Amazon hasn’t repeated that strategy elsewhere.
In June, I posted my question on a popular affiliate-marketing discussion forum, asking if any publishers or retailers could identify any companies which began collecting sales tax in any state as a result of the “Advertising Nexus” issue. Nobody could name even one.
I also left a phone message and sent an email to Assembly Member Nancy Skinner, the law’s sponsor in California:
Ms. Skinner: I left a phone message, but thought I’d clarify my question. As you know, I’m upset about the “Advertising Nexus” tax law, which forced Amazon to stop paying me for advertising on my web site.
But I’m open to learning more about [how] California and other states benefit from this law. Specifically, could you name ANY online retailer which began collecting ANY state’s sales tax because of an “Advertising-Nexus tax law”?
I’ve only been able to identify one: Amazon made a strategic decision to “collect the tax and sue” in New York, though it hasn’t repeated that strategy anywhere else.
Surely North Carolina or Rhode Island should be able to identify some merchants who started collecting sales tax for those states after the Advertising-Nexus law was passed there. But they won’t say.
I’m not even going to be picky: I’ll include any merchant who changed their sales tax policy “near the time of” any PROPOSAL regarding an Advertising-Nexus bill, even 18 months before or at any time since, and even if the bill didn’t pass.
I’ve posted the question to several experts, who’ve all said the same thing: “That’s an interesting question.” Nobody has been able to identify a single merchant (other than Amazon in New York) who has begun collecting sales tax in ANY state, in a situation in which it could conceivably be argued that an “Advertising Nexus” proposal might have been a factor.
I would appreciate if you could identify any merchants you’re aware of, who have begun collecting sales tax for ANY state as a result of the “Advertising Nexus” issue being raised.
Ms. Skinner has not responded.
I’ve noted in other posts here that I believe that these laws are unwise, ineffective, and unconstitutional. They’ll eventually be stricken down by federal courts (but as legislators have noted, any taxes collected during that time would be kept by states). There are several much more effective, fair, and legally plausible strategies if states actually sought to force out-of-state retailers to collect sales tax. (Since those other strategies would actually be fair and effective, few legislators dare to propose them, and no lobbyists will support them.)
But given the precarious financial situation in California and other states, and my personal belief that out-of-state retailers should be required to collect sales tax for all states which impose them, I’d love to see some benefit from these laws. Seeing such benefits might reduce the sting from losing 26% of my advertising revenue on July 1.
But so far, the only effect of these laws has been the termination of advertising relationships with many thousands of web publishers (small businesses) in each state, shifting revenue away from states which enact “advertising nexus” laws, and thus reducing those states’ income-tax revenues while collecting no additional sales taxes. Some of these small businesses have actually moved to other states, in order to retain their advertising relationships — thus shifting jobs, payroll taxes, and 100% of their income tax to other states.
Please prove me wrong: please identify any company which began collecting sales tax in any state as a result of any Advertising-Nexus Tax Law (“Amazon Tax”).
Advertising-Nexus Tax, Affiliate Marketing
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Affiliate Marketing, Affiliate Tax, Amazon Tax, Internet Business, Politics
I’ll go a step further… Rhode Island has *lost money* because of their nexus law. Not only did all the affiliates pull out of the state, cutting off a source of income for the people, people with online businesses are moving out of the state. What’s worse is that since folks are earning less cash as a result of the law, they have less money to spend (less sales tax for the state) and less income to pay income tax on at the end of the year.
I don’t think you’re going to find a company that is actually charging sales tax. It’s much easier to just terminate the affiliate programs. As a business, that’s what they need to do to maintain their advantage. Also, they refuse to be forced into the rolls of tax collectors for these mismanaged states.
As a California affiliate, this hits close to home. I agree with Amazon Tax, California will actually loose money because of lost income taxes from affiliates.
The only companies who are collecting the tax already had to collect it because they are based here or have a retail location here.
Amazon is now collecting sales tax for California and several other states which enacted “advertising-nexus” laws, so it’s likely that California’s enactment of the “Amazon Tax” has almost certainly resulted in a net increase in sales tax collections.
Many other e-commerce merchants have refused to collect sales tax for California, and have purged California web publishers from their advertising programs, but it’s unclear what the amount of lost advertising revenue might be.