The Internet sales tax or advertising tax news from North Carolina is not encouraging. Legislators in North Carolina continue to work on the budget and the latest version still includes the modernized nexus definition. As I mentioned in earlier posts, both Senate and Representatives are embracing the revision of the new definition of retailer that would require out of state merchants to collect and remit sales tax; both included it in their proposals. The Governor also embraces the concept and has stated this several times.
Although affiliates in North Carolina have been terminated from many programs already, I would expect more terminations are likely. Indicators are that North Carolina will have a strict interpretation of the law, much like Rhode Island. As you may recall there is apparently no ability to rebut the presumption of nexus in Rhode Island.
As North Carolina progresses towards implementing new nexus rules, it becomes apparent that our industry needs to also make changes. We need to continue to work together to identify solutions to all the challenges we face. Internet sales tax is only one part, but our reaction to this challenge indicates our viability on a much larger scale.