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

The House of Representatives did not override the Governor’s veto of SB1678; SB1678 included amendments to bring Hawaii into conformity with the streamlined sales tax agreement. This means the Governors veto stands. It can also be confirmed that there was no override of the Governor’s veto of HB1405. Thank you to the Honorable Carol Fukunaga for confirming this information.

While Internet marketers in Hawaii may breathe a temporary sigh of relief as they look forward to being reinstated by Amazon and other merchants, our long term problems are not solved. We still face these same challenges in other states and, next year will probably see an escalation in actions in all states with a sales and use (or excise) tax. The simple reason is that technology has changed the way we shop. As such, whether we like it or not, sales tax laws will change.

The Streamlines Sales Tax Project is a step in the right direction but it is not ideal. It still presents challenges for both merchants and states. In addition because it has not been adopted by all states, it is not a complete solution.  The adaptation of the SSTA is complicated and it takes years for a state to make all the necessary changes. Large states such as New York have additional challenges and they do not see it as practical. It has also not been accepted on a Federal level.

What is needed is Federal action; either tax or don’t tax Internet sales. The mixed standards do not level the playing field. New York and Rhode Island Internet marketers are at a distinct disadvantage as our states have instituted ‘modern’ nexus laws. Whether the playing field between online  stores and brick and mortar stores has been leveled remains to be seen. When advertisers/affiliates are removed from programs in NY and RI in order for a merchant to remove a nexus it seems to me the field is not leveled.

There is still a lot of action when it comes to Internet sales tax legislation. Below  is a brief summary of the the status of some of the states I have been writing about. As you read over the list you will notice that there is a trend towards dropping separate legislation and adding it to a budget bill. While one reason for this is that it simplifies passage of a more balanced budget, it is also done when legislators run out of time to pass a bill. Making controversial bills a part of the budget  also  keeps  the legislation under the radar of constituents. Some parts of a budget will escape notice because other aspects of the budget are even more controversial.

While some states have great websites that we can use to watch proposed and pending legislation, many do not. Some states are still working on a way to make it possible to search pending bills.  Budget bills are typically even harder to keep an eye on, especially when states resort to last minute, late night sessions. Some even hold secret or closed sessions, releasing the proposed budget just hours before voting. Budget bills are also frequently lengthy, hundreds of pages long, making it easy to miss something.

In addition to the states listed below, dozens of states have either enacted or are considering enacting download taxes on digital products such as music, video and books,; this move is often seen as a precursor to an Internet tax. They are also talking about Internet tax legislation for next year.

What does all this mean for us? It means we all must work harder at keeping an eye on the actions of all states.

• California – California Internet tax part of pending budget – high alert
• Connecticut – back to committee for further study; ongoing budget talks
• Hawaii – Hawaii Internet tax legislation waits for Governor signing or veto. Takes effect July 1
• Maryland – did not pass committee; will be active again next session – high alert for next year
• Minnesota – was part of Senate/House budget which was broad vetoed by Governor; high alert for next year
• New York – New York Internet tax in effect since 2008 (June 2008)
• North Carolina – North Carolina Internet tax legislation part of pending budget
• Rhode Island – Rhode Island Internet tax legislation part of pending budget
• Tennessee – HB1947 and SB1741 in committee