The good news is we have a little more time to get ready. The bad news is Maryland affiliates will need to go through another round of possible Internet sales tax or advertising tax. State Senator Madaleno of Maryland has announced that in January 2010 he will introduce legislation that will require out of state merchants to collect Maryland sales tax for online purchases to Maryland residents. It is anticipated that his proposed bill will be similar to the one introduced in the last legislative session. That proposed bill required out of state merchants with Maryland affiliates to collect sales tax on sales to Maryland residents if the threshold was reached. That threshold was $10,000 in total sales in the previous four quarters from Maryland affiliates to Maryland residents.  As you know, that bill was introduced too late in the last regular session to be completely  passed. 

Senator Madaleno feels that his proposal establishes a more level playing field. In fact, he calls it an E-fairness bill. He estimates that his legislation will generate $7.5 million a year in additional revenue.

The original proposal was similar to the legislation that exists in New York, North Carolina and Rhode Island. As we have seen from the three states that currently have this legislation, interpretation can vary. Only time will tell how Maryland will interpret the law if it does pass.

While you may feel it is too early to think about interpretation, it is not too early to prepare. Maryland affiliates need to be proactive and prepare their business. We have seen that merchants will remove affiliates prior to a state passing the legislation.  Several merchants have publicly stated they will take those steps.   If you are an affiliate living in Maryland I urge you to get involved now. Get in touch with me so I can help you organize and prepare your business. Education, organization and preparation are critical.

To join a group to work on this issue contact me at Affiliate Voice LLC. I have also  posted about the developments in Maryland Internet sales tax at Get Ready Again Maryland

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?