As I mentioned at Affiliate Advocacy, Colorado is now taking steps to tax online purchases by requiring out of state merchants to collect and remit the sales and use tax. You can read the details at Rocky Mountain Lows.

Colorado Governor Bill Ritter has stated that the Department of Revenue will adopt regulations that will implement the changes needed to enforce the “existing law”. Governor Ritter stated, “Though this will equate to new revenue to the State, this is not a change in tax policy; but rather, is an enforcement of existing law.”

The estimated increase in revenue is $5 million annually. He anticipated a July 1, 2010 start for the new level of enforcement of the nexus law.

I am unsure of exactly what steps Colorado needs to take to adopt new regulation. I have received conflicting answers. One answer I have received is that the legislators do not need to do anything, the revenue department is empowered to do what is needed to make this take effect. The other answers are that legislators will need to pass budget with this proposal intact or that they will need to pass a new act.

You may recall that prior to passing their version of the affiliate tax, North Carolina indicated that they didn’t really need to do it and that the revenue department could take whatever steps they needed to require the collection. That was the back up plan. It seems like this alternate path may be one that many other states take. Guess we can call it the “Quiet Affiliate tax”.

Combine this quiet approach with the approach of other states that are conducting audits and with the states that are working on legislation (Maryland, California, Florida…) we are in for a hectic year. Merchants should begin to explore the alternative of collecting the sales tax. There are companies that perform and simplify these tasks.

I recently posted a brief interview with Avalara. This would probably be a good time for merchants to read that and then follow up with them to learn more about real solutions.

See complete text of the budget proposal – Budget Reduction Proposal

Earlier today I announced that Affiliate Advocacy will be hosting a conference call to discuss how we can prepare for the possible and likely nexus legislation during the upcoming legislative session. The session is designed to help everyone prepare so they can react in an efficient  manner if and when nexus legislation is introduced. As we learned last year, even proposed legislation can severely impact the income of an affiliate. Merchants, program managers and networks are also susceptible.

In my opinion, the time to begin to prepare is now. Preparation is not panic; preparing is planning. By preparing now, affiliates can help safeguard their income.  Every affiliate in every state needs to realize that they can be affected by nexus laws. We will review the steps that every affiliate should take starting right now.  Affiliates need to take steps that are separate from fighting legislation. These steps will help ensure that no matter what happens regarding nexus, an affiliates business is not vulnerable. 

Affiliate Advocacy believes that it is not only the fight but the dealing with the after effects and the impact that is important.  Not every affiliate will be able to fight the legislative battles but they can safeguard their business. During this call we will also  discuss the legislative chatter regarding modernizing the nexus laws. In addition, we will discuss the role of networks and merchants as their help will be needed. We will talk about what all of us can do to prepare.

Join us for the call, not to panic, but to plan and to work together.

Title: “Affiliate Advocacy – Preparing for Nexus Legislation”
Date:  Tuesday, December 8, 2009
Time:  12:30 PM – 1:30 PM EST

Register now by clicking the link below:
https://www2.gotomeeting.com/register/875894226

Wisconsin recently added a digital download tax. In an attempt to level the playing field between brick and mortar stores and Internet retailers. Wisconsin now requires sales tax to be collected on downloads of music, books and ring tones. If you are a merchant and currently include these products check with your accountant to make sure you are in compliance.

All merchants, regardless of products sold,  are urged to contact a sales and use tax attorney to ensure they are in compliance with all of the current sales and use tax laws. As we have seen over the past several months, it is becoming more common for states to question the activities of out of state merchants. While the emphasis is sometimes on pending legislation, all states with a sales and use tax have current laws merchants must comply with.  The current nexus definition in Wisconsin may impact many merchants as it includes solicitors and other representatives.

In addition to the digital download sales tax, Wisconsin passed other legislation that took effect October 1, resulting in many changes to sales and use tax laws.  As a result of some of these changes, Wisconsin is  the newest member of the Streamlined Sales and Use Tax Project.

Like many states, Wisconsin is facing severe financial challenges. Wisconsin has a budget deficit of nearly $6 billion.  With a deficit that large, it seems logical to assume they will be seeking revenue from many sources – including sales and use tax. Legislators have estimated that the digital download tax will bring in $6-11 million in additional revenue.

Wisconsin Department of Revenue