Never mind the overall decrease in use tax collected by Illinois, Georgia and Utah become the latest states blinded by affiliate nexus dollar signs.
Late last week, State of Georgia House Bill 386, their compressive tax bill, received unanimous passage in the General Assembly after receiving 155 votes in favor to 9 against in the House earlier that same week. Among the provisions in their bill is one stipulating any company generating more than $50,000 from Georgia residents collect use tax if they also have an affiliate program.
On March 22, Utah Governor, Gary R. Herbert signed H.B. 384 into law, expanding the obligations on remote sellers. Interestingly enough, H.B. 385, which would have required remote sellers to notify Utah purchasers their purchases may be subject to tax died in the Utah House. The Utah legislation takes effect on July 1, 2012, so it will be awhile before they realize this new use tax provision will result in less money than they think.
If business moves in other states are any indication, I would expect to see a flurry of Utah affiliate businesses migrating to tax-friendly Nevada, if they weren’t already headed that way to begin with. Georgia is surrounded by states with no affiliate nexus tax, which could be a boon to any one of them.
We’ll likely check in on this issue again next spring after both laws have had time to impact state coffers. Instead of increased use tax collection, I expect to see flat or negative use tax, loss of business income tax collected from businesses who generate revenue from participating in affiliate programs, loss of jobs from each state, and zero benefit to the businesses the bills claim to protect from harm.
If you live in one of these states, we’d love to hear how the affiliate nexus tax is changing your approach to affiliate marketing. Or if you think it’s a boon, share your thoughts on how your state benefits.
Becky is the Senior Content Marketing Manager at TUNE. Before TUNE, she led a variety of marketing and communications projects at San Francisco startups. Becky received her bachelor's degree in English from Wake Forest University. After living nearly a decade in San Francisco and Seattle, she has returned to her home of Charleston, SC, where you can find her enjoying the sun and salt water with her family.