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Unless you’ve been hiding in a hole somewhere, you’ve heard about American states and their goverment budget crisis. To fill the void the topic of internet and affiliate marketing tax has gotten pretty heated. Amazon canceling their affiliates in New York and Hawaii pushed the issue to its tipping point. Now there’s lots of discussions by hundreds of different corporate and government entities. It’s making the whole topic pretty confusing for the marketers on the street. Like me, many of you are probably wondering, “At what point should I really care about this and pay attention to it?”

I was doing a little more research about internet taxation and affiliate commissions establishing nexus today. I found a resource that might help you keep track of internet tax legislation. The fact is the landscape of our businesses could change dramatically if we’re paying close attention to this debate. Just think of how the FTC’s view of paid blog posting and testimonials has already change the internet (a little for better, a little for the worse if you ask me).

I have to keep track of this issue for two reasons. One, I work for a number of e-commerce website and what the states decide about collecting retail tax will impact their business. Two, affiliate marketing is a big part of making the e-commerce piece work.

Affiliates being considered sales people forces retailers to collect tax in all of the physical locations of their affiliates. And, probably it forces them to file income tax for the corporation as well (I’m not an accountant, nor do I play one on TV. Double check with your tax professional to be certain about any of my statements).

For big corporations who have multi-million dollar e-commerce businesses this can mean big dollars. Not so much on the sales tax front. That’s really more hassle than cost since the consumer would pay that portion. Admittedly it’s a big hassle with somewhere between 14,000 and 17,000 different tax jurisdictions to collect from. The bigger issue is having your whole company taxed in 50 different states. In the end the outcome of the internet and afifliate marketing tax could be deadly to both the company (merchant) and the affiliate (marketer). 

Affiliate are basically pay-for-performance marketers for internet retailers. Part of the debate is whether affiliates should be considered marketers or sales people. Commission Junction (CJ), one of the largest affiliate marketing networks, has a great resource I stumbled on today. I suggest bookmarking it and revisiting to see current discussions around the internet tax issue. Or add the internet tax RSS feed to your Google Reader.

CJ’s internet tax page shows the status of each state with respect to the debate about how to collect tax. You can select the state you’re interested in from the drop down menu. From there you’ll get a list of the latest news topics about internet tax for that state.

Since Commission Junction is purely and affiliate advertising network they have the most to win and loose on this front. Even if you can’t follow all the issue about this tax proposal, just follow CJ. The success of their business hinges on following this issue very closely. In fact, I think CJ has been very involved in the lobbying process in the last few years to protect their business.

Bookmark this page because they update it when the have new info.

View PDF presentation and video from a recent seminar panel discussion regarding internet tax.