Affiliate Marketers – The Sales Tax Axe Has Fallen In Colorado!
Posted by Kathy Jackson in Affiliate Marketing Wednesday, 17 March 2010 14:12 3 Comments
State governments have seen their budgets dwindle as the world economy has dwindled over the last few years. In an effort to fill state tax coffers, several state governments (California, New York, Rhode Island, and others) have attempted to levy a state sales tax on affiliate marketers’ sales. But until now, all of the efforts have failed.
Colorado’s HB 1193 is a “rewrite” of an earlier bill that was defeated largely due to an organized effort by affiliate marketers in the state.
The rewritten version of Colorado HB 1193 doesn’t mention “affiliate sales” or “advertising tax” as did the earlier bill. But that doesn’t mean that affiliate marketers and the companies that produce the products sold by affiliate marketers won’t be affected.
They will be!
Everyone doing business in Colorado “by soliciting business from persons residing in this state and by reason thereof receiving orders from, or selling to such persons residing in this state” IS AFFECTED.
It gets worse. HB 1193 decrees “each retailer that does not collect Colorado sales tax shall notify Colorado purchasers that sales or use tax is due on certain purchases made from the retailer and that the state of Colorado requires the purchaser to file a sales or use tax return” (The author added the emphasis on the word “purchaser.”)
ClickBank (based in Colorado) has announced that it will continue to do business with affiliates in Colorado.
Amazon has already terminated its agreements with affiliate marketers in Colorado. It took a whole eight days after the law went into effect for Amazon to pull the plug. You can bet others will follow suit.
We send our sympathies to the residents of Colorado who can no longer shop sales tax free on the Internet. But all online marketers may also need some sympathy. HB 1193 requires ALL ONLINE MARKETERS WHO SELL TO COLORADANS to comply with the law as well.
If you are making sales in Colorado, you should get legal advice from a tax attorney or a qualified accountant about complying with HB 1193.
Good info to know but sales tax is just the price of doing business. Most people automatically expect to buy things and pay a little more on sales tax. That’s the American way! The seller just passes the extra cost onto the buyer. That is if they are smart & it should not eat into your profits at all. 5-10% extra should not make or break a deal if there is true value. I am sure Clickbank will require tax payment included for each transaction up front to stay within the law.Other states will follow I m sure!
What a load of crap.
This is a classic case of government employees envious of others that have the ability to make more than they spend. It’s the old greedy route that governments take, it’s like you said Chris, they will simply move to another state.
Happened here in the UK too. They started to place extra tax on corporations. What did they do? Simply move from London to Ireland. (Google also set up shop there).
Then when governments are unable to manage their finances properly, blame low tax jurisdictions for it. (Why are they low tax jurisdictions? Because they can manage their finances properly).
I have no compassion for fat oversized governments.
Colorado lawmakers are both desperate and shortsighted. That new law will cost them more in loss revenue than it will gain because too many will feel compelled to move out of state,and those unable to move will continue tightening their belts and spend less within the state. Over time, its tax base will shrink instead of expand. Coloradans may find themselves barred from all or minimal online shopping opportunities.
They would have done better to create work for its citizens so that they would have the income to spend and/or invest in businesses.