Free at Last from Affiliate Nexus Tax?

Peter Hamilton

Yesterday the Performance Marketing Association tipped us off that the Marketplace Fairness Act of 2013 was introduced into Congress!

According to Rebecca Madigan, “this bill, when passed, will essentially reverse the Affiliate Nexus Tax laws that have passed in 9 states and devastated the incomes of 76,000 affiliate marketers.”

The means by which it attacks the issue is through simplifying state sales tax as a whole. States will still maintain the authority to compel online and catalog retailers (“remote resellers”) to collect sales tax, but they can only do so AFTER they have simplified their sales tax, according to the MFA.

If you haven’t been following along, the Affiliate Nexus Tax forces advertisers located in other states to collect sales taxes within states where their affiliate reside. As a result we’ve seen affiliate and publishers moving around the country, leaving their home states. We’ve seen giants like Amazon pull their affiliate programs in and out of states like California, and we’ve experienced a general feeling of unrest surrounding the relationship between an affiliate and the advertiser they are promoting.

The obvious problem with Nexus Tax laws is that all sales should be considered equal, regardless of who promoted them. If an advertiser outside of Illinois buys a billboard in Illinois, do they have to somehow pay sales tax on those customers impacted by the billboard? If you’re thinking, “well we can’t track that,” then why should a sale we can trace back to advertising be any more liable for collecting state sales tax than those that are untrackable?

If you take a look at the Marketplace Fairness Act Website you’ll see phrases like “a sale is a sale” and “24 states have already simplified their sales tax laws.” In theory, simplification will at least level the playing field so that all sales will be taxed equally in other states, rather than assuming additional state sales tax because the sale was influenced by a local affiliate.

The exact Sense of Congress reads as follows, “It is the sense of Congress that States should have the ability to enforce their existing sales and use tax laws and to treat similar sales transactions equally, without regard to the manner in which the sale is transacted, and the right to collect–or decide not to collect–taxes that are already owed under State law.”

Sadly, though, this isn’t the first time a bill like this has been introduced, and as we all know, politics are full of distractions. Let’s keep our fingers crossed, show our support, write your local congressman, and join the fight with the PMA!

To read the actual bill text, visit the Library of Congress.

Peter Hamilton

A digital marketer by background, Peter is the former CEO of TUNE, the enterprise platform for partner marketing. In 2018, he sold TUNE’s mobile measurement product to Branch, unifying measurement and user experience. He led TUNE’s efforts to bring better management technology and automation to marketing partnerships, across affiliates, influencers, networks, and business development relationships. Follow @peterhamilton

Leave a Reply