Wednesday, November 14, 2007

New York to Collect Affiliate Tax

Ok you operate out of New York but list books internet retailer affiliate under ABE, Amazon etc. Sounds familiar and has been very successful for many who could not reach the larger audience.

New York state's Department of Taxation and Finance has now stated that anyone with an Internet "Affiliate" will have to collect NY Sales Tax. Last week they stated a "requirement to register as a sales tax vendor for out-of-state companies soliciting sales through representatives." As a result any "affiliate" in New York, even, a person selling as an Amazon Associate, must, where tax is applicable, pay sales tax on all sales.

According to the report in Publishers Lunch, the state has implied that the policy is not subject to challenge, and is "intended to clarify current policy and does not reflect any change in requirements for vendors doing business in New York State." Businesses have until December 7 to register and begin compliance without facing penalties.

It throws up interesting questions about affiliate programmes, taxation rules within a global economy, and the location of business registrations and offices. What would be the impact if every state adopted the same rules?

We frankly leave taxation rules to those who know best and don’t always understand the implications of what you sell to who and where and the rules that are applied. However there are many who are building businesses on affiliate programmes and aiming to benefit from local pull, increased noise and alternative offers. It is unclear how this will pan out or whether it is merely teething issues that just go away.