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Thursday, October 30, 2008

Amazon New York Internet Tax Law Bill S08638 and The Golden Snowball Oracle

WARNING - POLITICAL STUFF AHEAD, run, Run, RUN!!! Regarding the New York State Internet Tax Law Better Known as the Amazon Tax Law.

Has the Golden Snowball website turned political? Hell no and it never will but this is something important that New Yorkers need to know about the new New York internet tax law and pretty much shows how part of my summer break from Golden Snowball went. Speaking of summer it was a pretty decent summer weather wise at the beginning with the middle being a little stormy but the end of the summer wasn't bad. The beginning of fall hasn't been to shabby either but the end IMO could have been much better temp wise. OK back to politics and enough about the weather. I save that talk for when I go on dates. Yeah I'm a boring date :( which is why I'm single hint, hint :) Jeez, I think I have 3 topics going on now. Dating, taxes and the weather. OK, Back to the new tax law!

On June 1st a new tax law went into effect to try and fill a gap in the New York State budget that effects you as an online consumer, myself and at least 10,000 others who do what I do for a living which is marketing online and believe it or not it can/will even effect the Boy Scouts and charitable groups who count on fundraising to fund their group outings and so on and here's why. One of the reasons that we were told that this would or could effect the Boy Scouts and even charitable groups is because let’s say they order fund raising products cheaper from a company in California. Before the new tax law went into effect they may not have had to pay taxes. Now if that merchant receives over $10,000 in orders from New York residents they will be required to collect taxes on them from these groups because the Boy Scouts and other groups are also considered a nexus now in NYS because they solicit sales from people in New York. In other words they are not allowed to advertise or go door to door to fundraise because that would make them in the eyes of New York a nexus for the company that they purchased their fund raising products from. The same would apply to church groups and so on if I understood the law right.

Contact Your New York Assembly Representatives

The new tax law now requires any online merchant in other states who have sales in access of $10,000 from New Yorkers to collect taxes from anyone that comes to their site that resides in New York coming from a website that has a relationship with a website owned by a person living in NY. That would be me and thousands of other New Yorkers.

OK, A little bit about myself, the GSB Snowman and why it effects me - Other than being the Official Stats keeper of the golden snowball contest I do have a real job which is called affiliate marketing. That's why every now and then you will see an advertisement here on the GSB site. Believe me when I say this site does not make money it does not make money. Although I did receive 5 bucks in the mail from Pat a couple of years ago for some wings and a beer which I thought was very nice. A few people in the past have bought something from here but that's not the reason for this site. I do it for the fun of it and to kind of break up my other work online not to mention that I really DO enjoy doing it. An example of one of my sites that actually helps me to earn a living is http://onlinehalloweencostume.info/ . The merchant I use on that site is Buycostumes who offers me coupons to pass on to you so that you can save during these hard economic times. That's just one example of many.

Trying to keep it short and you know me it just isn't going happen but trying to I'll sum it up like this. I build a relationship with a merchant online that I trust, isn't a spammer, that is an ethical merchant and so on and they will pay me a commission if any of my visitors purchase something from them. What makes it a win, win, win situation is that they offer me coupons or discounts to pass on so you win, if your an online shopper by getting a discount. I make a commission and the merchants get a sale so all 3 of us win. Unfortunately it's not quite as easy as it sounds but that's a brief description of what I do for a living. I try not to push too much stuff here at Goldensnowball.com but do throw up an ad every now and then to see if it's something you may be interested in. Most of you who visit here come for the snowfall information and are not interested in shopping which is fine. Like I mentioned GSB is just a fun site to help us pass the winter away.

Old Tax Law, New Tax Law - Here is the way the tax law use to be which was acceptable to the affiliates, merchants and shoppers and as fair as it can get and the way the new law has changed it which is unacceptable. If a company has a physical presence in NY and this also applies to most other states a shopper from that state would have to pay taxes if they have a brick and mortar store in that state. In other words using Walmart as an example because they have stores in NYS. Real, physical brick and mortar stores so they must charge any shopper from New York state sales taxes which normally include county and any other taxes because they do indeed have a brick and mortar store in the state. That's fine and was the accepted rule among the affiliates, shoppers, merchants and most states pretty much since Al Gore invented the internet :)

The new New York tax law which is Bill S08638 I believe, now makes myself and other affiliate marketers along with organizations like the Boy Scouts a Nexus for these merchants. The way NYS is doing this is by stating that if we have a physical address in New York State that we the marketers are the Nexus for the companies even though a Mom and Pop store may not have a store, building or any other brick and mortar presence in NYS. One of the important things to remember is that we pay NYS income taxes as affiliates. The fact is that we will be paying less income taxes now because what the New York Government didn't take into account some of the fallout from what this new bill has done to New York workers.

On my part so far I have talked with Senator DeFransisco's office and was told they did their part on passing the repeal and now it's up to the NYS assembly to step up to the plate and pass the repeal. Hearing that I contacted my assemblyman Al Stirpe's office and advised him that we were having a meeting in Albany and invited him to attend it to hear our concerns. Mr. Stirpe did return my phone call and we talked briefly about the bill and how it is sitting dormant somewhere waiting for someone to step up and get the assembly to pass the repeal bill. He wasn't able to attend the meeting but said he would look into it and get back to me. It looks like I will have to get back to him to see if he checked into it or not. In Mr Stirpe's defense I realize it is election time and he has a campaign to run and I'm not being sarcastic.

Anyways, It all comes down to an assembly person needing to have justification, a reason that the internet tax bill should be repealed. There are lots of reasons and here is around 10,000 of them. 10,000 is a guesstimate of how many livelihoods this new tax law is effecting... 10,000 hard working New Yorkers are seeing their incomes drop because of this tax law including New Yorkers who are losing Tens of Thousands of dollars from their livelihood and here is why.

The biggest fallout from this bill is that many, many merchants big and small have dropped NY affiliates from their programs for the fact that they do not want to deal with trying to figure out the New York tax law and to be frank they don't trust New York. Thousands of people like myself have been dropped and this is an estimate by over 100 merchants and probably more and merchants continue to end their relationships with NY residents as I type. The fact is that people, hard working people are being dropped by merchants from other states and in some cases losing a big chunk of their income. Taxable income meaning NY won't be collecting as much income taxes from us.

With the way the economy is right now I have to just shake my head and think is this what New Yorkers really need now and also ask myself where does this figure of 50 million dollars that NY expects to collect with this new tax come up from? How much is it going to cost NYS by fighting all the big lawsuits such as Amazon's and other big companies lawsuits? How much is it going to cost NY tax payers trying to collect taxes from the hundreds of mom and pop stores, merchants and other companies in Indiana and all the other states who decide the law is unjust and they aren't going to collect or pay NYS the taxes? Not to mention that this is just what you as a shopper needs to go along with the high price of gas, the losses your 40k's are probably taking is another tax on NY residents.

Well this summer the Snowman and a group of us from all over NY and people both affiliates and merchants from other states got together in Albany to hold a meeting to try and figure out a way to get this new tax law overturned or as I learned in political talk, REPEALED. Repealed meaning getting it to go away. No More! Bye-Bye New York Internet Tax Law.

It was a good meeting with great people who are seeing thousands of dollars of their livelihood disappear because of the new internet tax. In other words hard working people who pay New York Income taxes are losing a lot of their income that they won't be paying taxes on.

There is hope that this bill will be repealed and in fact the New York Senate has passed legislation to repeal the tax. Unfortunately the bill is just sitting on a table some where in the Ways and Means committee doing absolutely nothing. The reason being that it now needs a sponsor for the bill in order to have a chance to be put up for a vote in the assembly. If one of our representatives in the assembly gets the courage to sponsor the bill the senate passed it still has to be approved by the assembly and then signed into law by Governor Patterson. Of course with the NY government going on break in June until January 2009 which may be the soonest anything can even get done unless there is a special assembly called in before that to handle business.

Contact Your New York Assembly Representatives

SUMMARY OF PROVISIONS: This bill would repeal subparagraph (vi) of paragraph 8 of subdivision(b) of section 1101 of the tax law (internet retailers sales tax nexus provision).

JUSTIFICATION: The sales tax nexus provision proposed in the SFY 2008-09 Executive Budget and signed into law as part of the final budget was a way to force out-of-state retailers to collect sales tax from sales made to New York residents. This was accomplished by creating nexus through there definition of sales person. The new definition of sales person includes a web site owner who is a New York resident on whose web site there is an advertising link to the retailers web site. If a customer uses the web site to "click through” to the retailer’s web site and a sales results, the web site owner receives a commission in return for the effective advertising. Some retailers call this an "affiliates program". As a result of this legislation at least one on-line retailer has simply dropped its affiliates program for those web sites that are based in New York. The result of this action is lost commissions for New York affiliates while the on-line retailer is still not collecting sales tax from New York customers.

LEGISLATIVE HISTORY: Provisions were enacted as part of the SFY 2008-09 budget.

FISCAL IMPLICATIONS: Will save New York tax payers $50 million.

EFFECTIVE DATE: Effective immediately.

--------------------------------------------------------------------------------

Here is The Bill Being Held Up by The Assembly and the Ways and Means Committee because of no Sponsor!!!

STATUS:
S8638 RULES No Same as
Tax Law
TITLE....Repeals provisions of law relating to an evidentiary presumption to facilitate the administration of the sales and use tax

06/19/08 REFEREED TO RULES
06/24/08 ORDERED TO THIRD READING CAL.2231
06/24/08 PASSED SENATE
06/24/08 DELIVERED TO ASSEMBLY
06/24/08 referred to ways and means


Here is how your New York Senators voted for or against the repeal of the Amazon tax and if my research is right all of the Nay votes were from senators representing the New York City area knowing a large amt of our taxes heads their way. In fairness there were several reps from the NYC area who voted for the repeal and maybe we can bring on some of their assembly representatives to help get this bill repealed::

06/24/08 S8638 Senate Vote Aye: 44 Nay: 18 (the Senate passed the repeal overwhelmingly and now it just sits gathering dust)

Aye Adams
Aye Alesi
Aye Aubertine
Aye Bonacic
Aye Breslin
Aye Bruno
Nay Connor
Aye DeFrancisco
Nay Diaz
Aye Dilan
Nay Duane
Aye Farley
Aye Flanagan
Aye Fuschillo
Aye Golden
Nay Gonzalez
Aye Griffo
Aye Hannon
Nay Hassell-Thompson
Nay Huntley
Aye Johnson C
Aye Johnson O
Aye Klein
Nay Krueger
Aye Kruger
Aye Lanza
Aye Larkin
Aye LaValle
Aye Leibell
Aye Libous
Aye Little
Aye Maltese
Aye Marcellino
Aye Maziarz
Nay Montgomery
Aye Morahan
Aye Nozzolio
Nay Onorato
Nay Oppenheimer
Aye Padavan
Nay Parker
Nay Perkins
Aye Rath
Aye Robach
Nay Sabini
Aye Saland
Nay Sampson
Nay Savino
Nay Schneiderman
Nay Serrano
Aye Seward
Aye Skelos
Aye Smith
Aye Stachowski
Nay Stavisky
Aye Stewart-Cousins
Aye Thompson
Aye Trunzo
Aye Valesky
Aye Volker
Aye Winner
Aye Young

This is what I believe is a temporary fix for merchants to allow New York affiliates and the Boy Scouts to continue doing business together. The catch is that most merchants don’t trust it and are not allowing New Yorkers back in to their programs. In other words it states that no solicitation is allowed on behalf of the merchants in order not to create a Nexus: It comes down to I cannot tell my family or friends that I have so and so merchant on my website that has a great deal going on or advertise the merchant in any way. The Boy Scouts, charitable groups and so on cannot go door to door or advertise the merchant’s products that they are selling for fund raising if that merchant earns over $10,000 in sales from NY residents unless the merchant is collecting sales taxes from NY residents.

(vi) For purposes of subclause (I) of clause (C) of subparagraph (i)
of this paragraph, a person making sales of tangible personal property


or services taxable under this article ("seller") shall be presumed to
be soliciting business through an independent contractor or other
representative if the seller enters into an agreement with a resident of
this state under which the resident, for a commission or other
consideration, directly or indirectly refers potential customers,
whether by a link on an internet website or otherwise, to the seller, if
the cumulative gross receipts from sales by the seller to customers in
the state who are referred to the seller by all residents with this type
of an agreement with the seller is in excess of ten thousand dollars
during the preceding four quarterly periods ending on the last day of
February, May, August, and November. This presumption may be rebutted by
proof that the resident with whom the seller has an agreement did not
engage in any solicitation in the state on behalf of the seller that
would satisfy the nexus requirement of the United States constitution
during the four quarterly periods in question. Nothing in this
subparagraph shall be construed to narrow the scope of the terms
independent contractor or other representative for purposes of subclause

http://www.tax.state.ny.us/pdf/memos/sales/m08_3_1s.pdf

Sites Referenced and Explaining the NY Tax Law

* NY Affiliate Voice
* ABestWeb.com

Disclaimer - This information to the best of my knowledge represents my opinion and others on how the new internet tax law otherwise known as the Amazon tax is effecting New York residents. For any interpretation of this law we recommend you consult your legal council. Cheers, the Snowman.

Contact you assembly rep at http://assembly.state.ny.us/mem/ and tell them to repeal this internet tax law.

6 Comments:

At 10/31/08, 9:56 AM , Anonymous Anonymous said...

Maybe some day New York will wake up and realize that they are just pushing people to move out of the state with tax after tax. Good luck to you people fighting this and thanks.

I'll be contacting my state Representative.

 
At 10/31/08, 12:47 PM , Anonymous zr800 said...

WOW Pat- As the treasure of BSA Troop 273 I am glad I saw this. But incidentally, BSA T 273 does not buy anything for fundraising online. In fact, we don't even participate in the BSA's popcorn sales because we think it is rediculous to ask someone to pay $10 for a can of popcorn. We sell Apples in October and wreaths in November & December which we purchase from local farm and nursery. We also rent canoes and sell food at the town's summerfest.

But from what you are saying, I would not be able to use our tax exempt form if we purchased fundraising materials over the internet?

 
At 10/31/08, 8:36 PM , Anonymous Anonymous said...

Dude, the Golden Snowball numbers are very helpful but in this post the word you want is "affect," not "effect." Here's why:

http://everything2.com/e2node/affect%2520vs.%2520effect

 
At 11/2/08, 11:06 AM , Blogger Patrick said...

Anon, I hope you do contact your rep and I agree that the high taxes are part of the reason people are leaving NYS!

ZR, it's good that you all buy local ;) As for your tax exempt status I'm not quite sure how that would work. I believe that if you were to buy lets say candy bars online to sell and the merchant has over $10,000 in sales they would still be required to charge taxes under the law that went into effect/affect June 1st. I'm not quite sure though and I will try to have a woman I know has been one of the leaders in getting this overturned stop by here and answer that for you.

That said, you can bet that all of the other states are watching the outcome of this in the courts and if it is deemed legal by most likely the Supreme Court most of the other states will follow and the entire internet will be taxed. Something that isn't good for the consumers.

There is a bill in the works in the US Senate to try and block part of this law which you can read about at
http://nyaffiliatevoice.com/2008/10/federal-action-to-repeal-the-tax/ and there is probably more info about the Boy Scouts and charitable groups.

Anon2, unfortunately gym, lunch, math and study hall were my best periods in school. English and History were always my tough subjects but it's never too late to learn ;) Thanks for pointing that out and I will attempt to go through and fix the errors.

 
At 11/2/08, 2:33 PM , Anonymous Melanie said...

Hi zr800, Pat asked me to stop in. This law has no real effect on your use of tax exempt status to purchase items. Right now, the only way it would be of consequence is if you were to start soliciting business on behalf of an out of state merchant in order to raise money or earn commission for your Troop located in NYS.

To give an example, let us say your troop makes a deal with “Store A” who only has stores in California. “Store A” will pay your troop 5% of all sales you can generate. To encourage sales, “Store A” gives you a great coupon or discount to use, benefiting your troop, their families and friends. Your Troop does a great job and sells $11,000 worth of merchandise. Under this law, “Store A” now has a presence here in NY and must now collect NY sales tax on all regular sales to NY residents. It doesn’t affect your tax exempt certificate and what you buy but it does matter to the merchant who, if they are considered to have a presence in NY, must collect tax on all regular sales to NY residents.

As a result of this law, many merchants decided to not let any New Yorkers sell for them. Unfortunately this includes letting nonprofit groups sell their items as fundraisers. Many museums and other non profit groups (including Scouts and PTA) are suffering.

NY has clarified the law and how merchants can work within the law but some merchants are unwilling or unable to take the steps necessary, putting many NY affiliates and non profit groups who rely on affiliate income in financial trouble.

It is a complicated subject and I hope I haven’t made it more confusing. I am more than happy to answer any questions. (Please note I am not a lawyer or an accountant and am unable to give advice. I can only give opinions)

BTW, my son is a Webelo 1. :)

 
At 11/3/08, 8:38 AM , Blogger Gavin said...

Thanks for all the information. We are going to stick to selling Apples & Wreaths which we buy locally and avoid the whole issue!

 

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