NY state chokes “Associates” income trickle

Bad news for those of us budget-pinched creators — bloggers, authors, musicians, artists, etc.– trying to tap a bit more revenue by offering links to such online stores as Amazon.com from our own websites.

Publishers Lunch, an industry newsletter, reports that the New York State Department of Taxation and Finance has declared that an e-commerce site (such as Amazon.com) which provides compensation or commission on sales derived from links to an individual’s site is responsible for sales tax on all purchases made through “vendors” or “representatives” with a “physical presence” in the state.
That is: The tax guys say if you belong to an online affiliate program like Amazon’s, and you live in NY state, then you are the “physical presence” rendering the online seller responsible for collecting state sales tax. Apparently, it would be Amazon and the other online stores – not we affiliates — who would be responsible for registering with the state and collecting the taxes. But this could cause web sellers like Amazon to abolish affiliate programs, or re-evaluate what they pay out to members.
Currently, online retailers are excluded from sales tax collection, though online buyers are supposed to declare and pay sales taxes on their state return. (Did you know that? Do you do it?) At the federal level, Congress has upheld the exclusion several times, but according to the website < Icantbelieveitsnotademocracy and its blogging tax advisor Maude Newton, the state’s “clarification” is the atom bomb blowing such an exemption back to the Stone (pre-Internet) Age.
What it would mean to me — assuming Amazon dumps the Associate program rather than pay these taxes – is the loss of an 80 cent payment if someone buys a copy of my book by linking to Amazon from my site. Since Routledge, my publisher, has ordered such a cautiously small initial stock of Miles, Ornette, Cecil – Jazz Beyond Jazz that even selling it out will not cover my tiny, tiny advance, and since Routledge does not guarantee further printings (though I expect in good faith that demand will behoove supply), an extra 80 cents per linked sale could be the only other $ I’ll see from my efforts for some time, maybe ever. And that 80 cents compares favorably with my royalty rate, even if my share of book sales do ever kick in (once sales return that long-ago spent pittance to my publisher).
Of course, I’m far from the only one affected — innumerable entrepreneurial folk have taken advantage of Amazon’s modest inducement to send potential customers its way. I suppose Amazon and/or other e-commerce sites will pursue their case for exclusion from state sales taxes in court, but that takes time. Meanwhile, will they suspend associate programs rather than dare fines and an extended assessment if they don’t register with Governor Elliot Spitzer’s tax collectors by December 7? Or will online retailers carry on bravely, flouting the state’s announced interpretation of it’s own tax law? My fingers are crossed (which always makes typing hard).
After all, I haven’t yet seen a check for being an Amazon associate — after three months, I’ve not accrued $15 in “commisions.” With Christmas, Hanukah, Kwanza and the other present-giving holidays coming up, my book and selections from its bibliography and discography to recommend, I’d kinda hoped I’d get there, maybe cover holiday card postage, or twine. Instead, here’s the state’s lump of coal in my stocking.

“Scrooge had a very small fire, but the clerk’s fire was so very much smaller that it looked like one coal. But he couldn’t replenish it, for Scrooge kept the coal-box in his own room; and so surely as the clerk came in with the shovel, the master predicted that it would be necessary for them to part. Wherefore the clerk put on his white comforter, and tried to warm himself at the candle; in which effort, not being a man of a strong imagination, he failed.” — “A Christmas Carol,” Charles Dickens (1843)

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  1. says

    That’s the greediest, most far-fetched legislation I’ve heard of since the creation of the sub-prime mortgage industry. How long do I have before Washington D.C. follows suit?

  2. Ruth MS says

    Hmm. Very interesting. Especially because no matter what, the residents or “vendors” of ONE state will get screwed.
    HM: How so, Ruth? I anticipate that someone is getting screwed if taxes are not collected and redistributed (to those in need, through programs that work, we would hope), but don’t see vendors in one state getting screwed over others.

  3. Ken Dryden says

    The new law is quite a stretch. Usually “physical presence” refers to a retail outlet or distribution center located in the state. But this is just another sign of the greedy outlook of New York state bureaucrats.
    HM: As you notice from my next post, this turns out to be moot!