[PetsWarehouse.com]

The New York State Department of Taxation and Finance on May 8 issued a guidance memo (TSB-M-08(3)S) explaining the state's new law requiring certain Internet retailers to collect sales taxes on online sales. The new law requires that Internet retailers register as sales tax vendors and collect sales taxes on sales, if they enter into agreements with individuals or companies in New York to refer customers to their websites. The guidance memo came just weeks after Amazon.com sued the state to have the new law declared unconstitutional.

It's five pages here (http://www.tax.state.ny.us/pdf/memos/sales/m08_3s.pdf)

It clears up many scenarios with examples.

like Example 4:
G Inc. (G) is an Internet-based retailer of gardening tools and supplies. G’s home office
is in North Carolina, where its warehouse and administrative offices are located. G makes sales
of its products nationwide, including New York State, and its products are delivered to its
customers by common carrier. Other than having customers in New York State and the
agreements described below, G has no other connection with New York State.
As part of its business plan to market its products in New York State, G enters into
agreements with several garden clubs and other local organizations to place online
advertisements on their Web sites, which, when clicked, lead the Web site user to G’s retail Web
site. In exchange for placing G’s advertisements on its Web site, G will pay the organizations a
set fee based only on the number of clicks on the link to G’s Web site, whether or not sales are
made.
G’s agreement with the organizations is merely to place advertising on the organizations’
Web sites. Therefore, G is not presumed to be a vendor making taxable sales in New York State
by soliciting business in New York State through the use of independent contractors or other
representatives. Therefore, G is not required to register for sales tax purposes.


Ps: I wonder if G means Google base:escape:



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[Jim Guinn]

Doesn't that contradict what was being said on the other thread? If this is true, this is better news for NY Affiliates.

Jim

[Kevin]

Yup, this is the document Brian and I were referring to in the SAS thread. To me, it excludes virtual affiliates without a "organizational sphere of influence" specifically on New Yorkers. Just IMHO though.

[GoNicoFish]

Yes, Jim. But, still a hit to affiliates with merchants that have dropped NY publishers to avoid collecting and paying NY sales tax.

[PetsWarehouse.com]

Instead of the knee jerk approach that Overstock and others have instituted they should have switched to a pay per click.

I guess their lawyers suck.:sssh:

[MichaelColey]

This is just pointing out the difference between CPC and commissioned affiliates. New York is saying that a CPC, CPM, or sponsorship arrangement doesn't constitute a nexus, but a commissioned or pay for performance arrangement does.

[Kevin]

It goes a little deeper than that I think, Michael. It spells out some promotional methods that need to be used to be considered a party in the nexus definition. The sticky one is email marketing.

This memo should be used to great affect by Amazon in their case.

[MichaelColey]

If you read the full report, though, they make a very clear distinction between advertising (CPC, CPM, sponsorship, etc - none of which require performance) and performance-based commissions. It's the performance-based compensation that they say triggers a nexus.

[Kevin]

Yup, no question on that, Michael. I was looking specifically at the rebuttal language, and which merchants could and couldn't rebut based on the activities of its "affiliates".

[Brian - ShareASale]

They definitely make the distinction between CPC/CPM and performance based... agreed.

They also have 2 examples (numbers 5 and 6) and specifically number 6 could be interpreted as an exemption for those affiliates who only place links on websites and don't use any other means of solicitation within the state...

If you are a merchant - read this memo, read the examples, and take it to your attorney. Don't drop your affiliates without fully understanding whether or not you are actually affected by the law!

[MNSandy]

How do they going to work around say PPC costs which are business expense, or hosting etc? At last at a glance it seems that people will have to pay taxes upfront even if it's loss situation, and then you are left with all the fun stuff?

[Kevin]

Not sure I understand what you're asking.