Ouch! The Taxman Cometh (CORRECTION)

If several states have their way, the tax law will be changing: “Hawaii has joined California, Connecticut, Minnesota and Tennessee in introducing state legislation that, like a New York state law enacted last year, requires Amazon.com Inc. and other online retailers to process sales tax on orders received through many affiliate web sites.” In the past, the general case law was that a state could only collect taxes on sales from companies that had a physical presence in their state. Now, even if, say Amazon, doesn’t have any offices or other facilities in New York, that state can still tax orders received/referred from affiliates who are based in the state.   The full story is here.

CORRECTION: The original post here said affiliates themselves would now be taxed. We have corrected the error. Affiliates, of course, already pay taxes on the commissions they receive. It will be interesting to see to what extent affiliate marketing is or is not affected, as states begin to tax these orders.

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