As May 31 is approaching,  many New York affiliates will begin to receive requests to sign the annual “proof of compliance” certificates I wanted to pass along some information I received.  According to our lawyer’s office, the New York State Tax Department is requesting that a line be added to the annual certifications. The line to be added is -
“This certification and all information herein is subject to verification and audit by the New York State Tax Department.”  While it should be evident that this is the case, NYS requests it be made perfectly clear.

I have updated the documents on line to reflect this request.  Please see the revised version of the Letter to Merchants  explaining the law and the ability to rebut. I have also updated the Sample Documents on How to Rebut the Nexus in NY.  Remember these documents are a guide, please consult your own sales tax attorney.

To read more about how to implement the documents and Three Step Solution please see the following posts:

Rebut the Nexus in NY  Step 1

Rebut the Nexus in NY Step 2

Rebut the Nexus in NY Step 3

It appears that the Amazon and Overstock lawsuits against the NYS Internet Tax have been dismissed. This means the Internet tax still stands and those companies with a physical presence will need to collect the sales tax. The reason that the case was ruled in the favor of NYS is that the law clearly states that merely having affiliates does not create a physical presence. The law is the basis for the two step solution so this ruling has no effect on the current situation. Everything can continue as it has been over the last few months.

The ruling should also convince merchants who removed NY Affiliates that they can safely do business with us. Affiliates do not equal physical presence.

The implications of the ruling will probably have greater implications for other states. Other states have been watching the battle in NY very closely. With the dire fiscal situations in many states I think it is only a matter of time before they take action. As Federal budget cuts hit this year many states will begin to enforce the tax laws that already exist. If merchants are not willing to take the extra steps needed in order to continue working with all affiliates then we will have several thousands of other affiliates from many states removed from programs.

Merchants who removed NY Affiliates in a “wait and see” approach must now decide do they continue on the path of avoidance and non-action or do they make educated decisions. Will you now reinstate NY Affiliates?

Networks need to realize that they must take swifter action to help educate their merchants. Help your merchants, help your affiliates and in the process help your own network.

Affiliates need to realize that the decisions made regarding NY affiliates will likely be the same for them. Educate yourself on your state’s stance. Educate yourself on the actions of your merchants and your networks.

Education is the key. No one can ever be criticized for making informed and educated decisions.

Over the past week or so I have been trying to put together a list of NY Affiliate Friendly merchants. There seems to be confusion with the definition.

A New York Affiliate Friendly Merchant is not just a merchant who currently accepts NY affiliates. A NY Affiliate Friendly Merchant is one who not only accepts NY affiliates today, but is also prepared for tomorrow, by setting up their programs so that NY affiliates do not have to be concerned about losing the “valued partnership” because of geography. They are either set up to accept sales tax, prepared to do so, or have the terms set up to rebut a nexus.

NY Affiliate Friendly status is obtained by meeting one of six conditions.

• NY based
• Charging NY sales tax
• Implemented the 2 step solution – Agreement to special terms restricting direct solicitation and signed affidavits in May of each year.
• Non taxable items sold
• Lead program or flat paid per click
• Under $10,000 threshold AND instituted special terms restricting direct solicitation that will offer protection if threshold is met.

For me, NY Affiliate Friendly means ready for today and ready for tomorrow.