State of Interstate E Commerce and Affiliate Tax

There is a lot of upset over the new internet sales tax laws that apply directly to online sales, and are already hitting some affiliates hard.

These laws require online merchants to collect state sales tax if they have local affiliates in those states. The states currently affected include California, Hawaii, North Carolina and Rhode Island – but many other states are in the process of following suit…

Merchants have always been responsible for sales & use tax on sales made within their own state whether that be online, offline, or mail order sales. The new laws propose that online merchants should also pay state sales tax in certain states where they have affiliates. The argument being that their affiliates represent a “physical presence” in that state.

A handful of cash-strapped states have weighed laws that would use the presence of affiliate marketers to force e-commerce companies into collecting sales tax. source

The New York State legislature has included a provision in their $122 billion budget. About $50 million of this is meant to come from a tax on some online retailers. source