Georgia and Utah Fail to Learn from Illinois. More Affiliate Nexus Taxes Passed.

Guest Contributor

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.

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  • Pc7878

    look at this problem wider.. it’s not about states.. it’s about government and lobbies form big companies who wants to monopolise their markets.. and those % in commissions cam make them better rankings on stock exchanges…

  • I’m not sure if I’m understanding this correctly, but is this a tax specifically for affiliates who generate X amount of revenue per yer?

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  • Steven Johnson

    I live in Georgia and I believe that on October 1, 2012 the nexus law will go into effect.

    I make enough from Amazon that it is worth moving the business to
    another state or country (I am planning on moving to South America).

    Has anyone heard anymore about what Amazon intends to do?

    What have affiliates done in the other states where amazon cut ties?

    I am in the process of writing a blog post so I can have all the information in one place and make the most informed desision.

    Thanks! — Steven

    • So far, Amazon has shut down their affiliate program in any state where a nexus tax goes into effect. It’s highly possible that they will do the same thing in Georgia.

      Most of the affiliates I know who have been impacted and had enough money at stake moved to a state where they wouldn’t be impacted (several from CA moved to NV for instance).

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  • John

    Any news on this? Wasn’t it supposed to go into effect on Jan 1 2013 in GA?