The End of Nexus Tax? Senate Passes Marketplace Fairness Act

Peter Hamilton

Over 76,000 publishers are about to be back in business.

Yesterday, the US Senate passed the Marketplace Fairness Act, which is a critical piece of legislation to help reverse the effects of the “Affiliate Nexus Tax” laws passed by 9 states. The Nexus Taxes have been wiping out 76,000 small Internet advertising businesses since 2008, as these taxes enabled 1,000 online retailers to avoid collecting sales tax from internet advertising businesses in these 9 states by severing advertising agreements with them.

The impact of the Nexus Taxes have been incredibly detrimental. We have seen many publishers and performance marketers actually move to another state just to stay in business and avoid the severance of their contracts with retailers, drastically impacting their livelihood, family, and friends. The Affiliate Nexus Tax is also notably unconstitutional, as all sales and associated taxes should be considered equal, regardless of who promoted them.

Rebecca Madigan, executive director of the Performance Marketing Association, says that “Passage of the Marketplace Fairness Act will require all retailers, whether online or offline, to collect sales tax for all states, and remove the ability to avoid collection obligation if they sever Internet advertising agreements. This will allow online retailers to reinstate their advertising agreements and get 76,000 small Internet advertising companies back in business.” (See the PMA’s press release here.)

As the Marketplace Fairness Act moves to the House, it will again require bipartisan support to push this from legislation to law. Senators from both parties advocated on behalf of the Marketplace Fairness Act, including Mike Enzi (R-WY), Senator Dick Durbin (D-IL) and Senator Lamar Alexander (R-TN).

Hopefully Representatives in the House will pick up and pass the bill quickly, which if then signed into law by the President will enable publishers in states like Illinois that were devastated by the Nexus Taxes to get back on their feet and resume promoting the brands and products they know best.

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