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

While attending Share A Sale Think Tank, a few merchants and affiliates asked me to clarify the steps involved in reinstating NY Affiliates to their programs. These step by step procedure was created by our NY Tax attorney after our meeting on July 28. For the sake of simplicity, I am dividing the steps into separate posts.

These posts are only meant to be a guide. Please download all of the documents for additional details and explanations. Use all information to assist you. It is not meant to replace the advice of your own lawyer or accountant but to ease the process of implementing the solution.

Step one is to add some terms to your affiliate agreement. Every merchant with an affiliate program already has terms and conditions that affiliates agree to when they join. These terms need to be modified by adding a couple of simple sentences. These sentences say that NY affiliates will not do certain things.  Copy the sample terms, insert your merchant name where indicated and add to your current terms.  Have NY affiliates accept terms, either electronic signature or if preferred have affiliate print out the terms, sign and either fax or mail to you.  Here are the sample terms:

 Sample of Terms and Conditions to be Added to Affiliate TOS by Merchant

Prohibition against solicitation activities by New York State resident affiliates.

As a condition of its participation in the (Fill in Merchant Company Name) Affiliate Program, Affiliate agrees that its solicitation activities on behalf of (Fill in Merchant Company Name) within the State of New York shall be limited to providing a link on Affiliate’s website to the (Fill in Merchant Company Name’s) own website. Affiliate acknowledges that under current New York State law, further solicitation and promotional activities by Affiliate within New York State may subject the (Fill in Merchant Company Name) to liability for collecting New York State sales tax on all sales to New York customers. Therefore, as a condition of participation in the (Fill in Merchant Company Name) Affiliate Program, Affiliate is prohibited from engaging in any solicitation activities in New York State intended to refer potential customers to the (Fill in Merchant Company Name), including, but not limited to: distributing flyers, coupons newsletters and other printed materials, or electronic equivalents of such materials; engaging in verbal solicitation, including in-person referrals or initiating telephone calls; and sending emails intended to refer customers to the (Fill in Merchant Company Name).

What those sentences mean is that NY affiliates will not solicit business directly for a merchant.  Some merchants and affiliates have asked what can NY affiliates do.  Very simply put, NY Affiliates can advertise their own sites.  Don’t mention the advertiser in any emails, newsletters or paid ads. There can be no direct to merchant ppc from NY affiliates.  NY Affiliates can advertise their own sites. Once a visitor is on the affiliate’s site they can then link to the merchant as any other affiliate would. According to the Tax Department’s memorandums of May 8 and June 30, merely providing website link on an affiliate site to the merchant’s own website does not constitute solicitation.

Documents You Need to Print and Read - Print all four

Here is the link to the complete sample documents (simplified version) Sample Terms/Affiliate Agreement for NY Affiliates

Here is the link to the  longer explanation drafted by our lawyer ( version for your lawyer, accountant, CEO…) Longer detailed version of Steps to Work with NY Affiliates

Here is the link to original official NYS tax memo - NY Tax Memo of May 8 2008

Here is the link to the official NYS tax memo of June 30 2008 that clarified what is and isn’t allowed NY Tax Memo June 30 2008

You can read more about our July 28 meeting here. July 28 Meeting of NY Affiliates

Next post will have Step 2.

The NY Tax Session at Affiliate Summit is on Sunday at 3:00. This is an important session and I urge you to attend.

Who should attend?

• Every NY affiliate
• Every Network
• Every Merchant who sells to NY residents.
• Every Affiliate Program manager.
• Any affiliate who resides in a state that charges any kind of sales tax.

It is very important session for the affiliate industry. You will learn how serious the issue is and that there are far more merchants who have dumped NY affiliates. You will learn that many lives are severely impacted by this over the last two months. Thousands and thousands of affiliates and their families are bearing the brunt of this, but others are also affected. Merchants, affiliate managers and networks are all susceptible to decreased revenues as a result of not partnering with NY affiliates. You will also learn that it is going to steam roll. Other states are watching this issue closely. It will probably  be several years before the Amazon lawsuit is settled, so riding it out til then is not an alternative.

At this session you will also learn that there is a solution for the NY tax situation. As a direct result of our meeting in Albany in July, we retained the services of a New York Tax lawyer to draft the necessary paperwork that will permit merchants to let us into their programs. We are now ready to be reinstated into all programs. We are looking to implement the solution and everyone in the affiliate industry needs to be aware of the current situation.

We will make our findings available to everyone to facilitate our reinstatement to programs.

If you are currently affected by the NY tax issue you need to be there to stand up for yourself, your family and your business.

If you are not directly affected right now, you need to be there to see how you can protect yourself and your business when your state government makes their move to collect the same taxes. The tax issue will steam roll and you need to be prepared. New York is simply the first state to act.

The key to the NY tax issue has been us putting forth an effort to understand the law and then find a solution. New York affiliates have taken an initiative. Now you need to take the next step, so be sure to attend the NY Tax session at the Summit – the survival of your business may depend on it.