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Previous: Overstock.com Drops NY Affiliates Thanks to an email I received from Linkshare inviting Linkshare Network members to a teleconference on the New York State sales tax change and affiliate marketing, I just found this memo explaining NY's stand on what is advertising (which, barring other circumstances, does not create a sales tax nexus in New York) and what is a "solicitation" which does create sales tax nexus in New York. Apparently if a NY state-based company runs an affiliate banner or link on their website and does nothing else, what's involved is advertising. But - if I'm reading this memo correctly - if the same NY-based website has a newsletter (delivered via print or email) and regularly includes ads in their newsletter, the way the law reads now, if they put the same affiliate banner or link in their newsletter (print or email), the ad would be considered a solicitation and cause nexus for the advertiser. So, maybe I'm reading this wrong, but it sounds like an ad on a website is an ad, but the same ad in an emailed or printed newsletter is... um.. a tax-nexus-creating "solicitation." Linkshare has an interpretation of the memo from their attorneys on their website. Comments I think NY as accounted for third-party networks in the law. If you read the memo it seems to me that NY is saying the advertiser offering the affiliate program is still affected even if they use a third-party network to set up contracts with affiliates. Posted by: Janet Attard |
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More on the NY State Sales Tax & Affiliate Relationships
Another angle on this law. It’s actually the network that pays the affiliate (in most cases). It’s the network, not the merchant that sends the W-2. Can this new law only apply to the affiliate networks based in New York, like Linkshare?
Posted by: jforthofer@theshopsat24seven.com on May 21, 2008 at 12:16 PM