trueMarketing - 2:54 pm on Jul 2, 2009 (gmt 0)

I'd just like to follow up and point out a few things becoming evident in just a matter of a couple of short days since NC passed this new affiliate tax law.

In just two days I've been told by several affiliate friends in NC that they (as well as myself) have set up their new affiliate LLCs, S corps, etc. with other family members in either Va. or SC. (one set up in Pennsylvania since his parents were located there). Now their parent(s) will be the sole member manager of their business. ;-)

These were just a few short Skype conversations I had but I'm sure this is happening by the masses as affiliates will find ways to set up their LLCs, C corps, or whatever, outside of NC boundaries to avoid this tax.

What does this mean for NC. Well, to name a few:

1) Just from the people I know this means tens of thousands of dollars not funneled back into NC as paid state dollars (state or other business related taxes).

2) I was also told that a couple of friends of my affiliates, who were themselves sub-affiliates, were not going to be able to carry on with their business, so they will be filing for unemployment.

This means more dollars out of NC tax payers pockets to pay for the more unemployment in NC because they some affiliates will simply close shop that were barely breaking even to begin with while operating their affiliate business.

3) from #2 above, the new unemployed affiliates will obviously not be paying any taxes back into NC. You get the revolving/mounting problem here for NC?

What I can't understand is this scenario below and why it means a tax has to be paid back to the state:

1) Let's say I run a website about LCD TVs and I live in NC.

2) On my website I have a banner ad that points to Overstock.com.

3) My site ranks well for "Phillips 42" LCD TV" so I get clicks from all over and from people in all states or Internationally.

4) Someone from Texas visits my site and clicks on the Overstock.com banner, lands on Overstock.com's website, and decides to buy an LCD TV from them.

So, to recap -- someone from Texas visits my website and I'm an LLC based in NC. Then they buy a TV from Overstock where their location in actually in CA (where the product is shipped from and the Overstock.com company is located).

It makes no sense to me that Overstock would have to pay for sales tax in NC for an online purchase from a resident in Texas where the sale was simply started from a click from my website.

Am I missing something here? Seems retarded to me. But maybe I need more coffee. :-(