New York’s affiliate tax

Affiliates vs. the Empire State

Affiliates vs. the Empire State

Last week New York state announced it was implementing a sales tax for web affiliates. Basically, doing affiliate business in New York just got a whole lot harder – impossible for some, as their top merchants (like, which just dropped 3,400 New York based affiliates) react to the tax issue, which takes effect June 1. is choosing to fight back by suing the state of New York.

On the affiliate network side, ShareaSale, an affiliate network, released information about how this effects their merchants & affiliates:

“As many of you are aware, the State of New York has implemented a new tax law which requires retailers based out-of-state to New York to collect sales tax if gross sales through an affiliate program totalled greater than $10,000 for the previous 4 NY State tax quarters.

In the State of New York, their tax quarters end on the final days of the following months: February, May, August and November.

The below report indicates how many dollars in gross sales were generated by your New York resident affiliates during that timeframe.

Quoted from the law: “The cumulative gross receipts from sales by the seller to customers in New York State as a result of referrals to the seller by all of the seller’s resident representatives under the type of contract or agreement described above total more than $10,000 during the preceding four quarterly sales tax periods. (Sales tax quarterly periods end on the last day of February, May, August and November.)”

If the number is above $10,000 – you may need to cross-reference all of your sales from that timeframe against your own records in order to determine what value was generated by sales directly to New York consumers. In that case, please contact us and we will provide you with a report that shows all order numbers from that timeframe that were generated by New York affiliates.

Please make sure to read the law, and utilize your legal counsel for any questions. ShareASale cannot provide any legal advice regarding this law, we can only provide you with the information needed to assess whether or not you are affected.”

Another affiliate network, Commission Junction, also released a statement to its customers:

“As you may already know, the State of New York recently enacted new legislation that addresses tax registration, collection, and other time-sensitive obligations. As with all laws, this law may or may not apply to you and your business. We are actively monitoring the law and will use reasonable efforts to protect ourselves and our publishers as we deem appropriate.

The application of the law is dependent on particular business and factual circumstances, and Commission Junction is not in a position to provide legal and tax advice regarding this law. However, we encourage you to perform the appropriate due diligence as it relates to your business.

For your convenience, we have provided a link to a memo from the New York State Department of Taxation and Finance, Office of Tax Policy Analysis, Taxpayer Guidance Division that addresses the new legislation:

This is big news if you’re doing running affiliate business out of New York – it could essentially cause the whole state to be non-competitive in the affiliate marketing arena. On the other hand, it can be difficult to tell where an affiliate is based. I imagine some New York based affiliates have already started ‘moving’ their virtual headquarters out of state.

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