The Affiliate Tax and CPC Programs

David Lewis at Revenews wrote an interesting article entitled "The End of Affiliate Marketing or the Rebirth of CPC?" related to the 'affiliate tax' that is hitting many states.  Specifically, he dives into how those CPA affiliates who are impacted may benefit from switching to CPC affiliate programs like the Shopzilla Publisher Program.  

For those who may be unfamiliar, several states are in various stages of passing laws that would change the definition of nexus.  Nexus means that the business has a legal presence in a given state, and must therefore collect sales tax on sales originating in that state.  The proposed change to the definition of nexus will include affiliates as 'salespeople' of the internet retailers they are affiliates of.  

For example, in California (one of the states where such a law is being advanced), although a business may not have previously had nexus in the state, under the new rule if a business has any affiliates based in California, they would need to collect sales tax on all California sales. 

Of course, most retailers would rather kill their affiliate programs in states that pass these laws rather than start charging sales tax on all sales in the state.  This is exactly what Amazon has done over the past week when it made the tough decision to end its CPA affiliate program in both North Carolina and Rhode Island.

As of today, New York and Rhode Island have already passed such laws.  Hawaii is predicted to pass its law (it's on the Governor's desk), and the situation is still ongoing in North Carolina and California.

As Lewis points out in his article, all is not lost if an affiliate tax passes in your state.  Using a CPC program like the Shopzilla Publisher Program is one way of for affiliates to work around it, since payment is made on the click, regardless of whether a sale is made.  Merchants may continue to list their offerings on CPC-based comparison shopping engines without fear of nexus being established in any other states.

If you are an affiliate based in one of the aforementioned states, we invite you to apply for the Shopzilla Publisher Program.  Don't let the affiliate tax wipe out a valuable revenue stream.

Comments

[charles rinehart]

Great info to keep people updated. All the best.