Colorado House Bill 1193 - Colorado Affiliates - And Are States Going After Affiliates?

In truth, states that have brought up bills attempting to tax internet sales based on physical presence of affiliates within their states are not trying to do away with affiliate business within their states. What they are trying to do is survive a financial crisis and somehow increase state revenue. The ability to increase sales tax revenues by taxing online sales made ot residents of the state is an idea many states are considering more seriously - especially after New York adopted tax provisions to force some online retailers to pay sales tax. Despite Amazon's attempts to get the law thrown out, it has held up so far.

While the debate continues regarding whether or not it is within state's rights to tax these internt sales, some companies like overstock.com have simply refused and have cut off all sales and affiliates within those states. 

The argument that an affiliate located physically within a state is a difficult one - rife with all the vageries the internet creates for lawmakers everywhere.  

What I do know is that it seems overboard to me for many of these companies like overstock.com to simply drop all of their affiliates in an attempt to avoid collecting sales tax.  Sales taxes have always been a burden on businesses as they are required to do the collecting and the reporting, not the states as in the case of income tax.  Throwing out all of your affiliates in attempt to avoid doing what every other legitimate business that operated in the state must do in an attempt to force the state to allow you to operate differently smacks of a corporation strong-arming the state into compliance with its wished.

Don't get me wrong, I'm actually not a proponent of sales tax as I've always believed income taxes were more fair across the board, but that isn't the debate on the table here.

Effectively, though, what these laws are saying to companies is that if you didn't have affiliates here we wouldn't tax you - at least my reading of them.  And so the company is willing to destroy your business in the process of avoiding the burden of collecting sales tax for the state.

Colorado House Bill 1193 has passed the House by a one vote margin and is now being sent to the Senate for further consideration this week.  (Listed here under House Bill 10-1193). Overstock.com has already stated that if the bill looks like it will pass, it will remove all Colorado affiliates from its program.

The question remains as to what affiliates should do regarding legislation and affiliate programs that challenge their businesses and livelyhood.  The most important things that you can do are to get educated on the issues and get involved.

You can get educated many ways.  

1. Commission Junction has a page dedicated to following internet retail tax laws as they pop up in various states.
2. Affiliate Advocacy also has an excellent site dedicated to keeping people informed about the various internet retail tax and so-called nexus laws that are being considered in various states.
3. Joining your local Chamber of Commerce may be helpful if you are interested in advocating for your business on a local level.  While many internet marketers don't join, having more voices in the mix showing that we consider ourselves to be legitimate business owners and euntrepenuers is going to be vital to the fight in the long run.

Consider seriously whether or not you want to affiliate with a company who will drop you in a second based on a sales tax law being considered in your state.  The only voice we as affiliates have against this type of treatment is to not affiliate with the program in the first place.  If you do decide to affiliate anyway, understand the risk that you are putting your business under.  Companies like Amazon.com are continuing to fight the legistlation in New York without throwing away your business - this is not the case with overstock.com.  This should tell you something about howmuch a company appreciates its affiliates and understands the work we do to make their business more successful.

Whatever else you do, get involved with your Congressmen and Senators.  They are supossed to be there for you.  Provide input - you would be amazed at how few people write or speak with their elected officials regarding the issues that are most important to them.  Your voice in the conversation is important.  Be heard.  If you don't like the results, vote accordingly.

You are not powerless.