I'm glad this topic started over here. I've done pages and pages of blogs covering every side of this issue and there are some important points everyone should know.
"I suspect we will drop our NY Affiliate program like a hot brick."
1) The tax law only goes into effect if you have more than $10,000 in sales over the past rolling 4 quarters.
2) Don't think I can link to it but Brian from Shareasale has a really good blog about why merchant should not drop affiliates in NY. He's not just standing up for affiliates but has some valid reasons about how it can hurt merchants to do this.
3) Overstock throwing 3,400 affiliates under the bus has caused lots of problems that will affect them in a variety of ways.
VERY IMPORTANT FOR ALL:
Hope I can link to this, since the NY law was linked to, I hope the link to the DMA interpretation of the law can stay for everyone's benefit.
I reported yesterday that Linkshare has gotten the DMA (Direct Marketing Association) involved in the fight which is really good, since there is no affiliate marketing association to fight this and the DMA is much bigger than than the affiliate marketing industry anyway.
DMA LEGAL HAS WRITTEN AN ANALYSIS of the NY LAW
MERCHANTS - Important to read that doc, but if you're in a hurry skip to page 3. In a nutshell, they are saying that if affiliates just have links to the merchant this DOES NOT CONSTITUE A NEXUS according to the way the NY law is written.
A nexus is only created if affiliates are doing other types of direct marketing for the merchant in NY like passing out flyers, making phone calls or sending emails. Emails is tricky with some merchants. But with many retail products affiliates arent doing any emailing, just straight web based links and banners.
So anyway that doc is important to know about and have your lawyers review.
CONFERENCE CALL THURSDAY - For anyone that wants to get involved, Linkshare and the DMA are having an open conference call THURSDAY 5/22 11AM EST, to discuss the law and will have a Q&A session. I got an invite to do press coverage so will be covering the outcome of the call as best I can.
I can't find a link at Linkshare to give you for the full communication I blogged about, because I got it by email and it's long. So here's just the conference call info.
"Email: government AT the-dma.org to receive personalized dial in information. Please let them know you are a member of the LinkShare Network."
Note: Linkshare by the way is based in NY so could have it's own set of problems and is also Overstock's affiliate network, so I think that's why they've taken a proactive role as opposed to what CJ did on the issue which was just lame!
One of my clients got the IAB involved and they had a meeting about this yesterday. I have not gotten a report back yet but should have info this AM. But that's another big org that could help if they get behind us.
Oh and a small affiliate network I'd never heard of, based in NY was able to get a conference call with a bunch of NY government tax officials. They have another conf call Tues I think and some of our industry leaders are getting on that call. They'll call me right after to let me know what comes of that call.
What else? Oh someone here asks how they are going to track this to find out what merchants need to collect, pay and report tax? My guess is this... They are offering amnesty from back taxes for merchants that come forward and self declare before June 1. They threaten that if you don't pay taxes and should have and they catch you, they'll charge you with back taxes too. My guess is they will make an example of a couple other big merchants if they don't comply and use that to basically scare people into reporting and paying.
There is no way they can audit this! I have merchants DESPERATELY trying to get the info they need from the networks to find out how many affiliate they have in NY and how much sales revenue they have generated. The merchants have NO access to affiliate addresses to run that type of report and the networks don't either. So how can NY find out.
Exception - Shareasale is the only network so far that has come up with a way for merchants to run a NY affiliate sales report, so if you are on SAS you can easily find out what your NY volume is. MOre info at the SAS blog about the report and how it works.
There is so much more going on... Sorry if I rambled. I scanned pages and pages, trying to figure out the most important snippets to offer here. I'm pretty much covering this story full-time, so as more important info comes to light I'll try to get over here to let you know.
DISCLAIMER, I of course am not an attorney, not even close, only passing on news and info as I find it. Have to be careful with this issue, because there is a ton of misunderstanding and bad advice going around right now.
RE: Attorney's and legal advice. I know some OPMs and merchants who are desperately trying to get legal advice but their biz atty is clueless either about affiliate programs and the Internet or about dealing with tax issues from another state. I have a call into the biggest Internet lawyer out there to see if there is any way he can help - either merchants individually or collectively in a class action or something.
Also if anyone has any specific questions I'll try to keep an eye out here and get back to answer.
[edited by: lorax at 6:50 pm (utc) on May 21, 2008]