Amazon vs New York. You better pray Amazon wins this one.
The state of New York just passed a bill that could cause no end of grief to marketers who use affiliates to promote products. Amazon is challenging the bill as unconstitutional, and New York based affiliate marketers should be on their knees praying Amazon wins.
In most states, a company only has to collect taxes if they have a physical presence in the state.
New York has passed legislation re-defining physical presence to mean a company has a physical presence if it has even a single affiliate based in the state, or if a New York based site “earns a referral fee for sending customers to an online retailer.” Think Google Adwords on the New York Times?
If Amazon.com fails to defeat the state, it isn’t far fetched to suggest that Amazon might cut off all New York affiliates rather than lose sales by effectively raising prices for all the customers in that well-populated state.
And if Amazon.com does lose, look to other states to follow with a tax grab of their own, making Affiliate programs a lot less appealing for a lot of larger companies that currently run them.
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