States Want Tax on Web Purchases

(Money Talks News) — Online isn’t just a convenient way to shop, it’s also a way for just about anyone with their own website to make money. If you’ve got visitors, you can covert them to cash with an affiliate program.

Stephanie Lichtenstein with Performance Marketing Alliance tells Money Talks News, “an affiliate has a website and they send traffic to a merchant like Amazon and they get a commission for that sale.”

In other words, advertise for big retailers, and if your visitors buy something, you get paid. And people who manage affiliate programs, like Lichtenstein, make money too. And she has concerns about the future of affiliate programs. Two states so far have passed laws to collect sales taxes from retailers that have affiliates in their state.

“People are losing their whole businesses, they’re losing their livelihoods, because of this sales tax. It already went through in New York, it also is pending in North Carolina and went through in Rhode Island” Lichtenstein said.

Now you may be thinking: what’s the big deal if Amazon has to collect a sales tax in New York or Rhode Island. Well, rather than deal with the hassle, when those laws passed, they dropped their affiliates in those states.

“The merchant still goes on… Amazon’s still going to make money. They are losing some, but to them they don’t see it as worth it to collect the tax, so they just terminate their relationships” Lichtenstein adds with a nervous smile.

Result? The state loses two ways: they don’t collect the sales tax on Amazon affiliate sales, and they reduce the earnings of one of their citizens, which lowers their state income tax.

Maybe that’s why similar laws have already been defeated in several other states. But if you make money online, it’s something to keep an eye on.

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Comments & discussion

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  • David Straub

    It appears that with today’s questionable economy the worst enemies of the consumer and businesses alike is our own governments whether they federal, state, or local. It is unfortunate that the almighty dollar is more important than citizen’s livelyhood. The lose of revenue theory presented by government has finally reached its limits and is on the verge of rupturing as a result of uncontrolled government spending, not because Mrs. Jones buys a cute little summer dress for her daughter over the internet or because some sports fan dad buys a team shirt for him and his son. If government is so concerned with budget control then perhaps they need to take a closer look at their budget. Don’t screw over the citizens because you (government) is too moronic to controll your spending.