The impact of the NY advertising tax or the NY Internet sales tax has been devastating for many NY affiliates. I’ve chronicled several of  our stories in the series “Story of NY Affiliates”.  I interviewed and wrote until it became too overwhelming for me. Affiliates lost their entire business, suffered severe financial and emotional stress.

As other states are working on similar legislation we often hear the official numbers of sales tax collected. Last year from June 1 2008 through early December NY claims to have collected around $46 million in additional sales tax revenue from newly registered out of state merchants. This year it is estimated that the figure will surpass $62 million. While other states who are contemplating similar legislation hear these figures, they do not hear the other side – the income tax revenue lost.

Affiliate Summit is conducting an important survey to determine the impact the advertising tax has had on income.  I urge every NY affiliate who was in business last year to take the survey. Impact of NY Advertising Tax / Impact of NY Internet Sales Tax

The results of the survey will be used to help educate legislators on the impact of the new nexus laws. As we continue to work on this critical issue it is important to have a more concrete analysis of the impact. 

Since last year, Affiliate Summit has shown NY affiliates their support. This was clearly demonstrated in many ways. This support included adding the NY Tax Issues and Solutions session at Affiliate Summit East last year even though the deadline had passed and  made sure that NY affiliates were well represented.  Over the past year, many of their podcasts discussed the Internet sales tax issue, they invited me to be a guest to help inform others, they blogged about it and helped disseminate information as we uncovered it. Throughout the year they have shown us support; it is now time to give back. NY affiliates need to complete the survey. Results will help us as we continue to fight for repeal and reinstatement to hundreds of programs. Every NY Affiliate Voice matters!

Please, New York Affiliates,  help Affiliate Summit help us.

Complete the survey –  Affiliate Summit – Impact of  NY Advertising Tax Survey

I am angry, disappointed and sad.  I am also  truly dismayed at how little has been learned from last year and how little has changed. 

Lesson has not been learned.

Last minute terminations are pouring into the emails of affiliates in Hawaii, North Carolina and Rhode Island.

Last year everyone blamed day before terminations on  the lack of information or on the speed of the legislation.

Those were just convenient excuses.

Silence from others continues to be deafening.

Yesterday,  I was talking with a merchant about the Internet tax situation. This merchant is concerned about the impact of collecting tax, they wonder if it would have an adverse effect on their customer’s shopping. My thoughts have always been that it would make little difference. I base this on my own experience and on discussions I have had with friends, family and even my website visitors. We shop online because it is more convenient. You can almost always find what you want in stock, it is usually delivered within a couple days and you  don’t have to deal with crowds or traffic. I am sure some people do shop online to save taxes but I wonder what the percentage is.

The  merchant I spoke with asked if I could find anything to back up my thoughts. He needs something to show his partner to convince him not to sever ties with affiliates in an affected state. I have begun researching to find data to back up my opinion. It didn’t take long to find information. I immediately found an article at Online Wall Street Journal.

An article titled ”Amazon Fights Sales Tax Drive, Despite Modest Impact” written by By Scott Morrison of Dow Jones Newswires states that research has shown that sales tax collection has only limited impact with online sales.

But analysts said taxing Internet transactions would likely have a minor impact on the business of retailers like Amazon. Bruce Cundiff, an analyst at Javelin Strategy & Research, said Amazon has firmly established its reputation and relationships with online shoppers, and estimated a sales tax might reduce the company’s overall revenues by “low-single digit” percentages.

Mr Morrison also provided a quote from Bill Fox, one of the researchers involved in an University of Tennessee in-depth study of the impact of sales tax and online shopping. According to the article, Mr. Fox says that people are so comfortable with shopping online that sales tax has little impact.

In my opinion, “State and Local Government Sales Tax Revenue Losses from Electronic Commerce” By Donald Bruce, William F. Fox and LeAnn Luna, is a must read for everyone. A copy of this is available to read at the Streamlined Sales Tax Project ( Streamlinedsalestax.org )  website  Supporting Documents for Information on Federal Legislation for Streamlined Sales Tax. There is also a second article, “State Revenue Report for April 2009″ that contains fascinating information.

I will continue to look for additional research but this should serve as  a reminder to merchants, don’t make  decisions without knowing the true impact of collecting tax.

Like many others, I wonder why Amazon has decided to remove affiliates in some states with an Internet tax. Perhaps all the tax collection is just too much?