New tax law info from CJ

[adorton]

Un-edited for your pleasure. Don't know how they could enforce it but it's still worth a look.

Dear Ashley Dorton,

As you may already know, there are proposed California bills that could require the collection of sales tax for online purchases similar to bills proposed in other states and that could resemble the law that recently passed in New York State. At this time, a hearing date for AB 178 has been set for April 13, 2009. As with all laws, if passed, these laws may or may not apply to you and your business.

Commission Junction is headquartered in California and impacted by the current California budget crisis. Nevertheless, we are opposed to the recently proposed legislation and are working with a lobbyist and other groups in hopes that we can influence the rejection of the bills' passage. Rest assured, we recognize that our industry and many of our clients may be impacted by these bills.

The application of the bills is dependent on particular business and factual circumstances, and Commission Junction is not in a position to provide legal and tax advice regarding the bills. However, we encourage you to perform the appropriate due diligence as it relates to your business. You may be contacted by advertisers in the Commission Junction network as they perform their due diligence.

Additionally, following are two sources of information on the proposed California bills that you may find helpful:

http://democrats.assembly.ca.gov/members/a14/News_Room/Press/
20090202AD14PR01.aspx

http://www.leginfo.ca.gov/bilinfo.html

If you feel that you need more counsel on the bills, we recommend you seek independent tax and legal advice.


Sincerely,

Commission Junction

[PlatinumPi4u]

...democrats? Lobbyists? ... /thread.

But seriously,, if you guys knew the plans that obama and his people have for New Taxes, including on services, you would shit yourself. Google video search The Obama Deception and look into it... we are in for a bumpy ride...

[adorton]

Whoa!, outta repek for your VIP status I'll just say leave the political stuff at the door please. Dad always said there are 2 things you never talk about in the boardroom....Politics and Religon. Stick to the possible impact on fellow marketers.

[Capler]

Unless I'm missing something I think it's pretty obvious.

No matter what kind of tax it is - its obviously a hit to the bottom line no matter how you slice it.

Unless you work for AIG of course, then it comes back to you in the form of multi million dollar bonuses.

[NCMedia]

lol - will agree let's leave the politics off this board please, there'll be a time/place for that debate I'm sure.

N.

[terryq9317]

thanks for the heads up

[Ganceann]

Sales tax (VAT in the UK) is collected at the point of sale.

I recently received an "invoice" from commission junction about commission I received and it is unclear whether it was subject to VAT as I am not in a position to collect VAT from customers. I can only assume it means the commission I received was AFTER the VAT had been collected from the original sale.

Due to the tax being taken at the point of sale it "should" only directly affect product owners/vendors as they would be responsible for collecting and paying the Sales Tax/VAT. This may result in lower commissions being paid to affiliates... but affiliates have no way to be able to collect or request Sales tax/VAT.

The way it works at ClickBank is that they collect the VAT/Sales tax at the point of sale. This usually results in a slightly lower commission for a product that expected. I guess this will be the same knock-on affect for commission junction affiliates - for example, if commission was 7% on $100 it would be $7. With a sales tax added on of 10%, the customer would be charged $110 (or the affiliate would receive 7% of $90 - I know the math isn't exactly right).

The result would be the affiliate receives lower commission for the sale. However, the affiliate would not have to pay Sales Tax/VAT on the sale because it was already charged at the point of sale. The tax liability for an affiliate would not change - they would still need to pay tax on any taxable income earned in the applicable tax year at the applicable rate of taxation for their earnings.

[PlatinumPi4u]

Sorry guys, but political proposals for taxes by democrats OR republicans ARE political......

Thanks for the heads up!

[Ganceann]

Sorry guys, but political proposals for taxes by democrats OR republicans ARE political......

Thanks for the heads up!

Yeah - it is political, but the impact for California based affiliates and ANY affiliate who uses California based companies to help generate a sale will be affected by this bill. For example, if you use Google Adwords it is based in California and their service helped generate the sale. This means the product is subject to the proposed tax. So if a product sells for $100 with a 10% tax rate the product owner needs to account for the 10% ($10) tax.

Does this mean they will increase the product price by $10?
Does it mean they will absorb the cost and lower affiliate payout?
Does it mean they will absorb some of the cost and reduce affiliate payout?

An example is someone based in Australia using Adwords makes a sale to a customer who clicked their adwords ad on a site owned by a California resident. The product owner is in India and the sale was made to a person the UK. However, the sale was generated through the help of a California based company/entity (Not sure if ALL adwords ads would be subject to this - maybe ALL US adwords accounts) but as the website owner was based in California it is seen as aiding the sale and is therefore subject to the proposed Sales and Use tax. How can the Indian guy explain to the customer based in the UK that they have to pay California Sales tax on their purchase?

I know that is an extreme example, but I have read some of the information about this on another forum where it discusses some of the language used in the proposed bill and it is ambiguous at best. It really makes it almost impossible to escape having to charge the tax for lots of companies - especially since they are based or have a base in California.

Some of the companies that will be affected by this include many large companies and affiliate companies:
List of companies headquartered in San Francisco - Wikipedia, the free encyclopedia and List of California companies - Wikipedia, the free encyclopedia (including Blogspot, Craigslist, Digg, eBay, Google, Twitter, Technorati, Bebo, Commission Junction, Yahoo, Wikipedia and many companies who make use of affiliate networks).

So you can see it has far reaching implications due to the amount of companies that have a large web foothold - and other states are looking to follow suit with similar plans for out of state taxes. It seems to suggest it would be much better to have a single Federal tax than for each state to impose their own tax with their own definition of what is taxable for their state. The Federal tax could enable each state to set their own rate - so they would still have some say in it, but it would be collected on behalf of them and allocated to them by the Fed.

[bluffspot]

This is why I believe the Colonies (sorry... the States) should go to a flat tax system based on new goods sold only. Americans For Fair Taxation: Americans for Fair Taxation - how incredible would it be to have everyone paying their fair share... oh yes while they're at it... legalize ganja - not saying I'm 401 friendly, I think being an affiliate for a head shop would make my pockets even fatter.

[adorton]

@ bluntspot er. uh bluffspot

Cough, cough er 420. 401 generally refers to a section of tax code that allows for pretax contributions to be made to specific retirement vehicles. Or so I am told by my alien suppressors.

[bluffspot]

must be something in my tea..... where did I get 401 from??? Crikes I'm not even on the right blog...

[Capler]

Yeah - it is political, but the impact for California based affiliates and ANY affiliate who uses California based companies to help generate a sale will be affected by this bill. For example, if you use Google Adwords it is based in California and their service helped generate the sale.

Some of the companies that will be affected by this include many large companies and affiliate companies:
List of companies headquartered in San Francisco - Wikipedia, the free encyclopedia and List of California companies - Wikipedia, the free encyclopedia (including Blogspot, Craigslist, Digg, eBay, Google, Twitter, Technorati, Bebo, Commission Junction, Yahoo, Wikipedia and many companies who make use of affiliate networks).

There is a MAJOR loophole here. Prove that ANY of those companies ACTUALLY helped me make a sale. I might just be using them / throwing money at them - doesn't mean its working.

Its impossible to track.

So you can see it has far reaching implications due to the amount of companies that have a large web foothold - and other states are looking to follow suit with similar plans for out of state taxes. It seems to suggest it would be much better to have a single Federal tax than for each state to impose their own tax with their own definition of what is taxable for their state. The Federal tax could enable each state to set their own rate - so they would still have some say in it, but it would be collected on behalf of them and allocated to them by the Fed.

Now I don't want to get political here - but the fact the Federal Reserve (which is no more "Federal" than Federal Express) is privately owned by world bankers kinda makes me sick now that you mention the Fed.

Anyway, back on topic.

They would need to PROVE that those services in some way helped you generate the sales. Now if the aff company is based there you're f***ed - but luckily CB is in Delaware. Which is what alot use on this board.

[Ganceann]

There is a MAJOR loophole here. Prove that ANY of those companies ACTUALLY helped me make a sale. I might just be using them / throwing money at them - doesn't mean its working.

Its impossible to track.



Now I don't want to get political here - but the fact the Federal Reserve (which is no more "Federal" than Federal Express) is privately owned by world bankers kinda makes me sick now that you mention the Fed.

Anyway, back on topic.

They would need to PROVE that those services in some way helped you generate the sales. Now if the aff company is based there you're f***ed - but luckily CB is in Delaware. Which is what alot use on this board.

Easiest example to give is if an affiliate company is based in California and has any affiliate product listed. If any affiliate makes a sale of that product (as an affiliate sale), then the affiliate company helped generate the sale and therefore the product owner would need to charge the tax. *you pointed that much out*

The fact tracking is difficult is one reason why so many are opposed to this... maybe it becomes law to have to include a tracking pixel on any site owned by a California resident... no idea.

I do know the Fed is privately owned, but I am not aware of how the USA would collect a single tax from every state as each state sets their own taxation rates (from my understanding). All I meant was it would be much easier to have a centrally controlled system rather than having multiple states adding their own rates and passing their own laws with different agendas. A simple, straightforward rate would be much easier to implement and track as it would affect all X,Y,Z type transactions.

At the end of the day it is politicians looking to get more money from the public and should be opposed in principle - especially at a time when people are struggling. The last thing people want to see is lower internet prices being hiked up to cover tax.