Merchants - EXTREMELY URGENT Re New York Affiliate Tax Law

[Linda Buquet]

EXTREMELY IMPORTANT FOR MERCHANTS!!!

Merchants - URGENT Re New York Affiliate Tax Law

I'm rushing off for a meeting with the largest Internet attorney to see if he can help us with this issue. Check the 5 Star blog for more important info I have, as soon as I can find the time to blog it.

SPREAD THE word and pass merchants the link to the blog post above.
Super important!

[kbldshmn]

Yay Linda! Power to the people.

[Linda Buquet]

I've made TONS of edits to that post as new issues and different legal viewpoints surface.

I had a REALLY long talk with the Internet attorney so here’s an update.

UPDATE 1:30 PM: INTERPRETATION OF THE TSB as it Relates to Affiliate Links: Just had a very long detailed conversation with John Dozier Esq., Managing Partner of Dozier Internet Law. John is one of the leading Internet attorneys out there, understands affiliate marketing and has handled numerous affiliate marketing related cases on a variety of issues. We went over the TSB in detail and the way he reads it, is not as clear cut as it was when we discussed it on the DMA call.

If you carefully and critically read every place in the TSB doc that mentions advertising or placing links, some of the information even sounds contradictory. In some places it sounds as if they are saying regular advertising links are not a problem, but affiliate links are because compensation is based on a pay per sale model. So many potentially problematic issues came up and everything is all based on interpretation because it's not clearly written. The bottom line too is, this TSB document is not the law and is not binding. It's only an attempt to clarify and explain the law and is subject to change.

SO ALL THAT SAID: If I were a merchant I would not try to figure it out,
I would contact John right away to get some help. I would maybe also go ahead and do the TOS changes to be on the safe side. BUT REALIZE that simply changing your TOS in and of itself will not protect you and may not be grounds to rebut. Based on the way NY interprets and enforces the law, just having pay per sale affiliate links even with no other solicitation still could constitute nexus.

Based on everything that happened on those 2 calls and the fact that there are a ton of other issues people haven't even thought about yet... I'm going to say this is WAY more complicated than people realize and there are a bunch of loopholes and gotchas. I wish I had recorded and was able to share both calls with you, so you could hear 1st hand the viewpoints from 2 very knowledgeable lawyers.

I will continue to report on news as I find it, but for me to try and explain complicated phone calls with attorneys and translate interpretations of this law this when I'm not not a lawyer, is just really not a good idea. You just need to get a really good lawyer that understands affiliate marketing, Internet marketing and tax law!

Complete Coverage of the New York Affiliate Tax Issues Here

[Linda Buquet]

Dozier Internet Law: Top Ten Tips To Manage New York Sales Tax

Yesterday, I took it on myself to contact a leading Internet attorney - John Dozier Esq., Managing Partner of Dozier Internet Law. As I searched for an attorney to reach out to for industry assistance on this New York Tax law, one of the reasons I selected John is his in-depth background dealing with a variety of lawsuits and cases in the affiliate marketing space. I wanted someone that understood our industry.

Little did I realize when I called John, he had a bonus background that would really help in understanding this complicated and convoluted New York situation. John also "worked as a lobbyist on three tax bills, and assisted with the drafting of (and drafted) tax related legislation going back into the 1980s…"

So I don't think I could have found a better lawyer to discuss this case with and luckily John was EXTREMELY generous with his time. We spent well over an hour dissecting the May 8 Technical Services Bulletin TSB.

John told me he would try to blog this and and just let me know he did.
Dozier Internet Law: Top Ten Tips To Manage New York Sales Tax This is essential reading for merchants and affiliates affected by this law or anyone lobbying for our industry on this issue. Let me quote just a couple important snippets, but you need to go read the whole post!

1. Don't sit by hoping that the Amazon case will lead to a quick injunction that will save the day. It might, and it might not. Whatever the decision, it is likely to be appealed… your business will likely be on the hook… More….

2. Don't just jump to the conclusion that you need to cut off all of your affiliates in New York by June 1... More...

8. Begin to organize and be willing to finance litigation challenging the constitutionality of the law. Understand that if New York is successful, other states will follow. More...

10. My last piece of advice is probably the most critical. We have entered a landscape littered with mines and minefields. Every business affected will likely have a lot in common, and alot not in common, with each other. You should deal with this situation as a unique problem to your organization first and foremost. There are many tactics available to consider. One is litigation, one is accommodation and negotiation with the tax department attorneys and Attorney General to try and get a carve out for your business, one is termination of business relationships, one is going the political influence route, one is shifting the burden and liability to affiliates, one is turning to Congress for pre-emptive relief, I could go on and on. Just work through this situation in a quality way with the right team."

#4, 5 and 6 don't make sense to me. Don't understand shifting the liability to affiliates, or the hold back part, or why affiliates would need access to personal data like NY addresses. So I'll check with him on those points and see if I can get some clarification.

But this is all really great advice and I thank John from the bottom of my heart for caring enough to get involved in this issue. I believe he may already have a couple clients he's representing on the New York tax problem, so as he delves deeper and fights for them, he may have other information that he can share that will be helpful to the industry in general.

Merchants, you really need to get professional help on this from an attorney that understands affiliate marketing, Internet marketing, taxes and legislation issues. I've heard about lots of merchants who's business attorney's are at a total loss to deal with this situation. There is no doubt in my mind, that if I were a merchant John Dozier at Dozier Internet Law is who I'd be calling and I'd be doing it right now. You only have a few days to figure out the best course of action for your particular situation, because you need a few days to implement everything. June 1 is right around the corner.

Yesterday I was also on the Linkshare DMA New York Tax conference call and was able to get some good questions in and some clarification on the new law and more specifically the TSB from DMA Tax Counsel George Isaacson. Ton of important details in this long post. Merchants - URGENT Re New York Affiliate Tax Law

FURTHER ACTION: A group industry leaders and I are in direct communication with Jim Connolly, Staff Attorney in the Office of Counsel to the Tax Department of the State of New York. We are pulling together a list of important questions in order to get clarification on numerous issues. Jim has agree to answer the questions publicly. There are many gray areas and much of the language is unclear, so this should help everyone a lot. If you have questions please post them and we'll include the most relevant ones in the list that goes to Mr. Connolly. Additionally, there is a chance John Dozier could possibly weigh in on some of the questions you post here at 5 Star.

Comprehensive Coverage - New York Affiliate Tax Issues Here

[gallito89]

Leave it to New York to blame the mess of corporations on the individuals.