[mellie]

I just blogged about this. Not sure if you are aware but California has introduced Bill 178 which is their version of the internet tax.
Their definition of the bill clearly includes affiliates and links on a website as creating a nexus if sales are over $10,000 in previous 4 quarters.

I suggest California affiliates begin to prepare themselves in case this passes. Rumors are that it will. The politicians see 2 choices, raise all other taxes or collect the sales tax (actually a use tax) that should already be paid but is not.

Read Bill 178 http://www.leginfo.ca.gov/pub/09-10/bill/asm/ab_0151-0200/ab_178_bill_20090202_introduced.html

My blog post is here http://nyaffiliatevoice.com/2009/02/california-affiliates-get-ready/

[Snib]

I wonder if losing both NY and Cali affs would be less feasible than simply collecting taxes for merchants. I imagine as more states implement this merchants will eventually have to open their doors to all affiliates. In the mean time, what's a good state to move to? :)

- Scott

[MichaelColey]

One that doesn't charge sales tax?

[VampireSkunk]

Alaska :escape:

[Julian]

Everyone should move to an affiliate reservation in Nevada.

No toolbars allowed though.

[AffiliateHound]

Thank you, Mellie, for posting this. I somehow missed it with so much happening in the State Legis the past few weeks over the new budget.

All California affiliates - as Mellie said, and as she and other NY affiliates learned the hard way - we need to start taking action now.

Here is contact info for:

Californai State Assembly (http://www.assembly.ca.gov/clerk/MEMBERINFORMATION/memberdir_1.asp)

and also for the

California State Senate (http://www.senate.ca.gov/~newsen/senators/senators.htp)

START CONTACTING THEM NOW!

[Kevin]

Just read the bill. Far more air tight than New York's was.

Bad, bad, bad.

[mellie]

Fast action will be required as the politicians will probably act quick.

Affiliate Hound, do you have any connections in political area to get a feel for opinion? Rumors from outside your state say it's likely to pass in California and several other states poised to follow.

If any affiliates have political friends now is the time to speak to them.

[mellie]

Just read the bill. Far more air tight than New York's was.

Bad, bad, bad.

Seems like no wiggle room. They flat out say links on a site are enough.

[Kevin]

As a side note, any California resident that needs some coaching on this, please PM me here, or use the Contact form on my blog (http://72kilowatts.com/contact-me/).

I will be happy to give you my cell phone number, etc, so I can share what I learned about this kind of thing last year.

[Greg Rice]

I wonder if losing both NY and Cali affs would be less feasible than simply collecting taxes for merchants. I imagine as more states implement this merchants will eventually have to open their doors to all affiliates. In the mean time, what's a good state to move to? :)

- Scott

This will also mean many smaller merchants will go out of business. Complying, collecting and paying are tough enough for merchants, especially those who have to collect taxes by county. When you add the other states, the manpower and costs will be too much for small merchants to bear.

[mellie]

All Ca affiliates should prepare themselves by identifying merchants who do not charge sales tax. If they sell a product that is taxable and do not currently collect tax you are vulnerable.

Like I said in my blog, it only takes the loss of one key merchant to destroy your business, get ready!

I also suggest that you ask questions in public. Questions cannot always be answered for many reasons. If you get a yes or a no you know where you stand. If a public question is not answered take it as being very vulnerable situation. If you do not get an answer it does not necessarily mean bad or ignored. Due to corporate structure answers are not simple or easy, but you should take silence as a cue to prepare for every possibility.

Like Kevin said, I am also available to share what we learned from last year. Just pm me for phone or use contact here or through my blog.

[Snib]

I just DM'd http://twitter.com/schwarzenegger about the ramifications. I think we should all DM and publicly @reply to him about this.

- Scott

[mellie]

Can a mod edit the bill link in my first post to http://www.leginfo.ca.gov/pub/09-10/bill/asm/ab_0151-0200/ab_178_bill_20090202_introduced.html

Thanks!

[Kevin]

Hmmm. A PM I just got made me think.

The way this is worded, might it preclude Google advertisers from targeting Calfornia "located" websites?

The line was "other consideration", which makes me think that CPA is not the only channel they are targeting here?

[loxly]

Can a mod edit the bill link in my first post to http://www.leginfo.ca.gov/pub/09-10/bill/asm/ab_0151-0200/ab_178_bill_20090202_introduced.html

Thanks!
done.

[AffiliateHound]

Affiliate Hound, do you have any connections in political area to get a feel for opinion? Rumors from outside your state say it's likely to pass in California and several other states poised to follow.

If any affiliates have political friends now is the time to speak to them.Unfortunately, not any more. In the 1980s I was involved a bit in politics, but the people I knew then are unfortunately now all dead. I do know one state legislator, but from another state.

[Rexanne]

puke

I'm moving to Vegas :p

[simcat]

State budget deficits.
http://www.swivel.com/data_columns/spreadsheet/9565966?order_by_direction=DESC

[markwelch]

Bang! I don't know how I missed this earlier, but I'm taking action now.

I've just called and left messages for the staff members of the legislators who introduced this bill:

Assembly Bill 178
Introduced by Assembly Members Skinner and Calederon:
- Nancy Skinner - Tel: (916) 319-2014 (staffer: Liz Mooney)
- Charles Calderon - Tel: (916) 319-2014 (staffer: Tom White)


And I expect that if this bill moves forward, I will travel to Sacramento to speak against the bill at each hearing.

As with New York's law, this bill was almost certainly introduced for the very best of motives (reducing tax evasion during a time of financial crisis). Unfortunately, as we know, the actual impact of New York's law has been a trivial increase in sales-tax collections, offset by huge litigation costs and the loss of income for thousands of New York resident affiliates.

This bill would quickly eliminate a large part of my professional income, without providing any benefit to California.

California residents: Call or write your legislator's office today, to make clear that you oppose this bill and will take political action against it. In addition to calling your own state legislators, call the two legislators who introduced this bill.

Tell them about the impact that this bill would have on your income. Tell them that this bill is a misguided effort which fails to actually address the "real problem" (sales and use tax evasion), and which instead promises to reduce income (and state income taxes) for thousands of California residents who work part-time or full-time as affiliate marketers.

Non-California Merchants: If you've already excluded New York affiliates from your affiliate program because of that state's law, please take a moment to document the revenue that those affiliates have lost, and the compliance costs which you've experienced, and please share that information here and in communications directed to these legislators.

Don't wait until a hearing date is set. Don't wait until the bill is enacted into law. Act now.

[Bill]

Unfortunately that will be "2 down, 43 to go" when it gets implemented. :(

I expect Maryland to jump on the bandwagon soon. I think its too late for our state legislature to act for 2009, but I have a feeling it will be on the 2010 agenda. THAT'S WHY (one of three reasons) I am in the process of moving my business to Delaware.

[mellie]

I would also encourage you to contact local press get it in the news. Reference the thousands and thousands of dollars in lost income experienced by NY Affiliates. Stress the potential damaging effects on oncome of Ca affiliates.

Merchants should also start investigating the impact it would have on them. Everyone needs to get ready now rather than waiting to see if it passes.

Short of the streamlined flat rate tax taking effect, I think online retailers should seriously consider collecting the taxes. It is going to happen.

More and more states will follow. Several are near ready according to political buzz. The overall opinion is that not collecting it is hurting the physical stores within a state and the overall economy of states are suffering. Politicians will take the way that gives them the better image within their own state. Choice - collect tax from out of state merchant or raise other taxes that get noticed (school, property income...).

Raise a fuss and make sure the affiliate side gets noticed.

[mellie]

Unfortunately that will be "2 down, 43 to go" when it gets implemented. :(

I expect Maryland to jump on the bandwagon soon. I think its too late for our state legislature to act for 2009, but I have a feeling it will be on the 2010 agenda. THAT'S WHY (one of three reasons) I am in the process of moving my business to Delaware.

Very true, many are very close. If you examine your states current definitions some are even ready now. It's just a matter of enforcing it.

[markwelch]

Heads up: I'm not familiar with how info is normally posted on the leginfo.ca.gov web site, but the status info for this bill indicates that it may be scheduled for committee hearing on March 5. The staffer in my assembly member's office said that technically, the bill has not been scheduled for a hearing nor even referred to a committee. However, Charles Calderon (one of the two co-sponsors of this bill) is the chairperson of the Revenue & Taxation committee, to which the bill will almost certainly be referred.

A political warning: I know that political diatribes and debates are generally prohibited on ABW, but if anyone in this industry hopes to have any impact on this proposed law, it's critically important to understand how the legislative process works -- and how it's broken. (Remember that nobody likes to see how sausage or laws are made.) I've always been annoyed when staff members to my legislators lied to me, but they do it every time (and your political affiliation is irrelevant: I've been lied to by staffers who work for legislators whom I've campaigned for). The staffers will lie about the hearing date; they will lie about their legislator's position on the bill; they will lie about absolutely everything in order to try to keep opponents from actually appearing to testify against the bill. (I still resent that Bill Lockyer, who was once my state Senator and is now the current state treasurer, wrote me a letter after a legislative hearing, claiming that he had supported and voted for the bill at the hearing -- he was unaware that I had actually testified at the hearing and that I knew he had opposed the bill, but only substituted a "yes" vote many hours later so that his voting record wouldn't show his opposition.)

What this means is that because this bill has been introduced by two Democratic legislators, even though I'm a staunch Democrat, represented by a Democratic assembly member, I must accept that I will not have any realistic opportunity to speak out against this bill unless I work closely with at least one Republican legislator's office, and perhaps a lobbyist or two.

A final warning: Do not call or email your legislator and leave it at that. If it's not in writing, it did not happen. Instead, you must write a letter directly to each legislator (in this case, to your own Assembly Member and state Senator, as well as to Assembly Members Skinner and Calderon). If you don't write a letter, then you are not opposing this bill.

Added: I just noticed I inserted the same phone number for both legislator's offices, in my post above. The correct phone number for Mr. Calderon's office is Tel: (916) 319-2058

[mellie]

Having two sponsors means there is probably widespread support. The important aspect is that I see the co sponsor is Assembly Revenue and Taxation Committee Chairman Charles Calderon.

Going to be a tough fight in light of 2 sponsors esp if one is committee chair and the current economic conditions.

Work immediately on the Assembly but start also on the Senators.