The ABW solution for the Tax issues!
June 23rd, 2008, 10:51 PM
|
 |
Network Rep & ABW Veteran
|
|
Join Date: January 18th, 2005
Posts: 2,991
|
|
Haiko,
I agree that a combo-hybrid-cpc thing could definitely be a way around this. It is a far better solution than incorporating in other states, or having merchants drop affiliates, etc....
I'll see what I can come up with technically to do something... I think it might be more technically difficult than we think to come up with a number - but it is better than 0. 
__________________
Thanks,
Brian Littleton
President/CEO - ShareASale.com, Inc.
|
June 23rd, 2008, 10:55 PM
|
 |
ABW Founder
|
|
Join Date: January 18th, 2005
Location: New York
Posts: 21,529
|
|
WTG Brian! 
__________________
Continued Success,
Haiko
The secret of success is constancy of purpose ~ Disraeli
|
June 24th, 2008, 07:02 AM
|
 |
|
|
Join Date: January 18th, 2005
Location: Mansfield, TX
Posts: 10,969
|
|
I just realized one problem with this. You don't know which clicks are NY customers until the customer places an order. You can't go by geo-location because it is based on shipping address. If you pay some fixed amount (even $0.01), you're actually paying a commission because it essentially becomes $0.01 per "click that turns into an order". That turns it from CPC to performance based.
Perhaps it would be more feasible to just not pay commissions to NY affiliates for shipments to NY? Something like 94% of orders come from non-NY customers, so it's not a big loss to NY affiliates. Some might be able to negotiate a bit higher commission (on non-NY orders) to compensate, as well.
|
June 24th, 2008, 08:12 AM
|
 |
Analytics Dude
|
|
Join Date: January 18th, 2005
Location: Rochester, NY
Posts: 4,869
|
|
As a NY affiliate, I would actually have no issue in having all my NY sales reversed. My suspicion is that the impact to my bottom line would be negligible. 99.5% of my sales come from elsewhere.
I think trying to develop a way to get us paid for NY sales while not establishing the presumption of nexus is going to be difficult. Escpecially since merchants (see: Cafepress) are thinking now that the law is even more confusing than initially anticipated.
I like the idea though, H.
|
June 24th, 2008, 09:17 AM
|
|
ABW Ambassador
|
|
Join Date: January 18th, 2005
Location: Here
Posts: 1,687
|
|
The bulk of my sales come from elsewhere as well. I too would rather have the opportunity of getting commisssions on a majority of my sales instead of having nothing. Sounds like it's an acceptable solution. |
June 24th, 2008, 10:08 AM
|
|
Network Rep & ABW Veteran
|
|
Join Date: January 18th, 2005
Posts: 2,991
|
|
Perhaps this should be added to the agenda for the NY meeting of affiliates. I think it would be critical to have an actual legal tax expert from NY tell us if non-commissioned sales specifically for NY customers would remove the nexus.
I am not convinced right now that it would - but it is definitely a vague area and one worth exploring.
__________________
Thanks,
Brian Littleton
President/CEO - ShareASale.com, Inc.
|
June 24th, 2008, 10:29 AM
|
|
ABW Founder
|
|
Join Date: January 18th, 2005
Location: New York
Posts: 21,529
|
|
Quote:
|
Originally Posted by Brian - ShareASale
I am not convinced right now that it would - but it is definitely a vague area and one worth exploring.
|
The way I understand it, supreme court case law says that nexus = physical presence within a state. What NY is trying to claim is that affiliates create the nexus. Other case law shows that advertising alone doesn't entail a nexus as such, no restitution for the click or the sale by XX merchant to XX affiliate so it should fly.
__________________
Continued Success,
Haiko
The secret of success is constancy of purpose ~ Disraeli
|
June 24th, 2008, 02:06 PM
|
 |
Affiliate Manager
|
|
Join Date: January 18th, 2005
Posts: 412
|
|
If the networks do pass the state cookie through, then the merchants can program their carts to see if the shipping destination and the state cookie match. When this happens, the merchant charges the sales tax to the customer. Why would the affiliate not get paid the commission, the merchant's profit would be the same. Of course, if the merchant is not willing to charge the customer sales tax - in that event, the affiliate can forgo the commission for that sale while keeping the opportunity to remain an active affiliate of the merchant.
|
June 24th, 2008, 02:26 PM
|
|
ABW Founder
|
|
Join Date: January 18th, 2005
Location: New York
Posts: 21,529
|
|
Quote:
|
Originally Posted by buyjewelry
If the networks do pass the state cookie through, then the merchants can program their carts to see if the shipping destination and the state cookie match.
|
No, it's best that a third party (the networks) decifer and handle the cookie if/ then actions, not the merchants, if not just for ease of implementation of the myriad of other reasons.
__________________
Continued Success,
Haiko
The secret of success is constancy of purpose ~ Disraeli
|
June 24th, 2008, 02:33 PM
|
|
Analytics Dude
|
|
Join Date: January 18th, 2005
Location: Rochester, NY
Posts: 4,869
|
|
I'd also rather see the networks handle it (Sorry Brian) since it would be far safer if the transaction "never happened", rather than have it reversed. It's minutia, but the way courts work, who knows.
|
June 24th, 2008, 05:57 PM
|
 |
Moderator - http and a telephoto
|
|
Join Date: January 18th, 2005
Location: NYC
Posts: 14,106
|
|
Quote:
|
Originally Posted by Haiko de Poel, Jr.
No, it's best that a third party (the networks) decifer and handle the cookie if/ then actions, not the merchants, if not just for ease of implementation of the myriad of other reasons.
|
Thanks for posting this haiko. I know that I don't have the technical ability to change my cart to do this and neither will the majority of merchants. |
June 24th, 2008, 06:00 PM
|
|
Network Rep & ABW Veteran
|
|
Join Date: January 18th, 2005
Posts: 2,991
|
|
Loxly,
Merchants, at the very least, would need to be able to send a code back to a network during the process of a sale that is to be shipped to NY. ... Is that what you were referring to?
__________________
Thanks,
Brian Littleton
President/CEO - ShareASale.com, Inc.
|
June 24th, 2008, 06:11 PM
|
|
Moderator - http and a telephoto
|
|
Join Date: January 18th, 2005
Location: NYC
Posts: 14,106
|
|
No Brian, I was referring to buyjewelry's post that all kinds of merchant processing would need to be done to determine stuff. I agree that the network tracking cookie needs to do the "work" and hopefully most merchant carts will be able to pass the variables you need.
|
June 24th, 2008, 09:49 PM
|
|
|
|
Join Date: January 18th, 2005
Location: Mansfield, TX
Posts: 10,969
|
|
Quote:
|
Originally Posted by buyjewelry
If the networks do pass the state cookie through, then the merchants can program their carts to see if the shipping destination and the state cookie match. When this happens, the merchant charges the sales tax to the customer. Why would the affiliate not get paid the commission, the merchant's profit would be the same. Of course, if the merchant is not willing to charge the customer sales tax - in that event, the affiliate can forgo the commission for that sale while keeping the opportunity to remain an active affiliate of the merchant.
|
You're totally misunderstanding the NY tax issue. The use of NY affiliates generating a sufficient volume of orders shipped to customers in NY creates the presumption of a nexus. If a merchant has a nexus in a state, they are required to collect sales tax for all sales shipped to that state -- not just sales generated by an affiliate in the state to customers in the state.
The whole idea behind this thread is to structure things so that NY affiliates don't create a presumption of a nexus. |
June 24th, 2008, 10:32 PM
|
 |
Member
|
|
Join Date: June 28th, 2006
Posts: 101
|
|
Keep in mind that a cart - at least one at CafePress - can contain both affiliate and non-affiliate sales. I believe it could possibly contain sales from multiple affiliates if they track the affiliate at the time of the add-to-cart and keep it. I know I've had orders as a shopkeeper with multiple products where only some were counted as affiliate sales.
Jim
|
June 25th, 2008, 10:43 AM
|
|
ABW Founder
|
|
Join Date: January 18th, 2005
Location: New York
Posts: 21,529
|
|
In addition to Brian (SaS) I've asked LS, CJ, PFX and AvantLink to investigate and comment on the possibilities of this postulated solution.
__________________
Continued Success,
Haiko
The secret of success is constancy of purpose ~ Disraeli
|
June 25th, 2008, 10:45 AM
|
|
Analytics Dude
|
|
Join Date: January 18th, 2005
Location: Rochester, NY
Posts: 4,869
|
|
Thanks H.
|
June 25th, 2008, 01:56 PM
|
 |
Network Rep
|
|
Join Date: January 6th, 2006
Location: Youtaugh
Posts: 1,971
|
|
Quote:
|
In addition to Brian (SaS) I've asked LS, CJ, PFX and AvantLink to investigate and comment on the possibilities of this postulated solution.
|
We've been following this thread, and discussing it internally. As Haiko said above, he asked us to chime in, so here's what we have been discussing...
As to the question of whether Haiko's solution is technically feasible. Sure. Given enough time and effort (to get the data needed from merchants, which would be the first hurdle), the suggested PPC model could be utilized. There would definitely be some other technical hurdles to overcome, though. For example, how do you come up with a fair PPC equivalent for new Affiliates (for which you don't have historical data) to calculate a reasonable PPC rate? If you make adjustments later, how do you calculate your adjustments, and does that put you in jeopardy of being seen as doing some hidden or hybrid performance model?
A flat rate has been suggested, but really, how can you make that fair to cover both Affiliates with high conversion rates and Affiliates with low conversion rates? If you do it on per Affiliate and merchant basis, wouldn't that basically be based on performance in the end?
So that brings it back to a performance-based PPC model, and like others have said, if you tie PPC to performance it's debatable whether that would get around the NY law. So that leaves us hesitant to explore the technical aspects of the solution further unless we are sure it's a good legal solution as well.
Also, PPC brings with it the issue(s) of click fraud and the technology to identify and prevent it. |
June 25th, 2008, 01:59 PM
|
 |
Outsourced Program Manager
|
|
Join Date: January 18th, 2005
Location: Ohio
Posts: 4,515
|
|
Love the idea H!
If compensating the NY affiliates based on EPC but not actually calculated until after the sale is an issue, then what about a merchant creating a group for NY affiliates and determining what the CPC rate will be for the coming 1,2 or 3 months? For example, if the merchant has a 30 day (or 90 or whatever) EPC of $10 for their program, they could offer this to NY affiliates for NY sales but the terms are stated for the upcoming time period and not when the sale is made.
If you state the terms are 10 cents per click for NY affiliates starting July 1 to Sept. 30, then isn't that CPC? If during that time (July-Sept) an affiliate is actually getting an EPC of $15, then for Oct 1 to Dec 31 change their terms to 15 cents per click.
This way it wouldn't be based on actual performance but estimated performance, much like any other ad campaign. If you run an ad site X for 3 months and it pays off well, wouldn't you be willing pay more per click for the next months?
If the terms are setup in advance, does this get around being considered CPA? Now it would be really cool if the network could do the calculations of EPC and make the adjustments automatically (sorry Brian, just thinking out loud here).
|
June 25th, 2008, 02:13 PM
|
|
ABW Founder
|
|
Join Date: January 18th, 2005
Location: New York
Posts: 21,529
|
|
If we remove the cpc aspect entirely we are still left with XX affs earning on all but XX state sales ... that ensures no fraud, no nexus, maintains a pure cpa model, keeps affiliates in the programs all with minimal effort.
__________________
Continued Success,
Haiko
The secret of success is constancy of purpose ~ Disraeli
|
June 25th, 2008, 03:04 PM
|
|
ABW Ambassador
|
|
Join Date: January 18th, 2005
Location: Here
Posts: 1,687
|
|
I think it's a fair solution. As a New York affiliate, I have no problem giving up payment on NY sales if it means I can still earn commission on all other sales.
This is on the agenda for Albany meeting and we'll see that it is submitted to the tax attorney ahead of time.
|
June 25th, 2008, 03:09 PM
|
 |
Troll Killer and best Snooper!
I decide when the pigs fly!
|
|
Join Date: January 18th, 2005
Location: New York, USA
Posts: 6,016
|
|
Works for me, too. 90% of something is still way better than no percent of it.
Mellie, have we invited reps from any of the merchants who've axed NY affiliates to join us at our meeting in Albany? (I promise I'll be good.)
|
June 25th, 2008, 03:13 PM
|
|
ABW Ambassador
|
|
Join Date: January 18th, 2005
Location: Here
Posts: 1,687
|
|
Quote:
|
Originally Posted by Rhea
Works for me, too. 90% of something is still way better than no percent of it.
Mellie, have we invited reps from any of the merchants who've axed NY affiliates to join us at our meeting in Albany? (I promise I'll be good.)
|
Yes, and also sending you a pm on this. |
June 25th, 2008, 03:32 PM
|
|
Network Rep & ABW Veteran
|
|
Join Date: January 18th, 2005
Posts: 2,991
|
|
It would be imperative to have an expert look at this possible solution.
One could still argue that a NY affiliate was being compensated for their work even if they were never being paid for commissions that actually involved NY customers.
So doing this could put a merchant, or even a network, in a bad spot of legal limbo. Merchants who have dropped have chosen to do so because they didn't want to be in legal limbo and felt it was not worth the risk to do so.... We need to remove that risk and limbo if we are going to present them with a solution...
__________________
Thanks,
Brian Littleton
President/CEO - ShareASale.com, Inc.
|
June 25th, 2008, 04:23 PM
|
|
ABW Founder
|
|
Join Date: January 18th, 2005
Location: New York
Posts: 21,529
|
|
I'll start with $1,000 for legal / accounting fees ... lets make this work.
__________________
Continued Success,
Haiko
The secret of success is constancy of purpose ~ Disraeli
|
|
| Tools |
Search |
|
|
|
| Display |
 Linear Mode
|
|
|
Posting Rules
|
You may not post new threads,
You may not post replies,
You may not post attachments,
You may not edit your posts
|
|
|
