March 01, 2010

Affiliates: Fight back against the advertising tax

As an affiliate, it’s important that you add your voice to the fight against advertising tax legislation that is popping up in states across the country. The Performance Marketing Association, which is leading our industry’s response to this harmful legislation, has asked us to share with you the following statement. Please feel free to share it in your blog and web postings. Our legislators need to understand what this legislation means for small business – and for the economic well-being of our country.

The Advertising Tax Hurts Affiliates

As an active member of the affiliate marketing community, I am opposed to any state legislation that would attempt to use affiliates to establish nexus for out-of state merchants.

I depend on my relationships with many out-of-state merchants for my livelihood. I put their advertisements on my website and earn a commission when someone clicks on that link to make a purchase or registers with that merchant. I am not an employee of any of these companies. I do not collect any money. I do not make the transaction. And I do not ship any goods. I simply advertise these offers to consumers for merchants.

This type of business model does not meet the definition of nexus. If bills like this pass in my state, many retailers will terminate their relationships with me and I will lose a large percentage of my income. That will impact my ability to provide for my family. I t will also impact the levels of income tax I pay to the state.

In fact, a handful of states that have passed legislation of this type (such as Rhode Island) have publically admitted that the states never realized the projected revenue and lost many small businesses in the process.

I want the affiliate marketing space to continue to thrive and grow. These types of laws will put small businesses, like mine, out of business.

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