Hawaii affiliates are being greeted with termination letters. In anticipation of the Governor signing (or failing to veto) the Internet Tax Law, HB 1405, merchants are beginning to remove affiliates in order to avoid a nexus. Unless vetoed, HB 1405 takes effect on Wednesday, July 1. Affiliates from Hawaii have expressed feelings of despair, anger and shock. Having been on the receiving end of termination letters from hundreds of merchants last year, New York affiliates know the feelings. I remember it as if it were yesterday
Termination letters have been sent to affiliates in Hawaii from Zappos, Amazon, Endless and several other smaller merchants. As affiliates begin to scramble trying to salvage what will remain of their business, I cannot help but think this is only the beginning.
Hundreds of letters will go out this week to thousands of affiliates in the states of Hawaii and Rhode Island at the very least. North Carolina probably is not too far behind. In spite of all the warning signs I fear many are unprepared.
It is my hope that merchants make educated decisions. Take a moment to read the law, hire a sales tax attorney to get clarification and then make educated decisions as to whether to remove affiliates or not. Remember there is a sales threshold to be affected and there is the ability to rebut the presumption of nexus. Examine if it would make sense to start collecting the sales tax. Afraid of losing customers over a sales tax? While I believe that it most likely doesn’t matter to the majority of shoppers, there are many things you can do to “make it up” to the customer. Offer them a $5 or $10 dollar coupon for their next purchase, give them free or upgraded shipping, or a small gift with your company logo.
It is my hope that affiliates take a positive proactive approach. Work together to find replacement merchants. Work together to contact merchants to keep lines of communication open. Explain that there are things they can do that will make it possible to keep working with you.
It is my hope that networks will assume their responsibility of ensuring that everyone is making informed and educated decisions. It is their responsibility to facilitate the recovery period.
It is my hope that we learned something from last year. I think we did, but the question is, did we learn enough?