I’ve received some negative feedback about the video ads currently running on the BlogHer sidebar. Apparently, they are significantly slowing load times. I’ve contacted BlogHer and they will be removed shortly. As always, I truly appreciate your feedback, thanks for letting me know!
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Last year, New York decided to aggressively pursue a sales tax rule already on the books by expanding the definition of venue to include companies with affiliates physically present in the state. Many vendors, Amazon.com included, made a lot of noise about pulling their affiliate program; interestingly, Amazon.com didn’t go anywhere. They did, however, challenge the imposition of the tax and lost. A strongly worded opinion from the court noted that Amazon didn’t “even come close” in successfully arguing that the affiliate programs were merely advertising. At the time, I posited:
What does it all mean? I think there will be two significant outcomes:
1, Online retailers will begin to rethink the way that they do business with affiliates – especially in a tough economic climate.
2, Other states will jump on the bandwagon. California, anyone?
Sure enough, in May of this year, California began exploring ways to enforce collection of sales tax from online sales – clearly a wink at the existing New York victory. Curiously, Amazon.com has remained relatively quiet.
But of course. Those are, after all, the big boys. New York and California are two of the largest, wealthiest states. Pulling affiliate programs out of those states, in my opinion, would be dramatic and costly – especially considering that the tax wouldn’t come out of Amazon’s pocket.
But say you wanted to make a statement, fire a warning shot to other states that might be considering similar behavior… What would you do? If you were Amazon.com, maybe you’d start pulling your affiliate programs from smaller states.
Sure enough, in May of this year, many Amazon.com affiliates in North Carolina received this letter via email (provided to me from an affiliate):
We regret to inform you that the North Carolina state legislature (the General Assembly) appears ready to enact an unconstitutional tax collection scheme that would leave Amazon.com little choice but to end its relationships with North Carolina-based Associates. You are receiving this e-mail because our records indicate that you are an Amazon Associate and resident of North Carolina.
Please note that this is not an immediate termination notice and you are still a valued participant in the Associates Program. All referral fees earned on qualified traffic will continue to be paid as planned.
But because the new law is drafted to go into effect once enacted – which could happen in the next two weeks – we will have to terminate the participation of all North Carolina residents in the Amazon Associates program on or before that same day. After the termination day, we will no longer pay any referral fees for customers referred to Amazon.com or Endless.com nor will we accept new applications for the Associates program from North Carolina residents.
The unfortunate consequences of this legislation on North Carolina residents like you were explained in detail to key senators and representatives in Raleigh, including the leadership of the Senate, House, and both chambers’ finance committees. Other states, including Maryland, Minnesota, and Tennessee, considered nearly identical schemes, but rejected these proposals largely because of the adverse impact on their states’ residents.
The North Carolina General Assembly’s website is http://www.ncleg.net/ , and additional information may be obtained from the Performance Marketing Alliance at http://www.performancemarketingalliance.com/ .
We thank you for being part of the Amazon Associates program, and we will apprise you of the General Assembly’s action on this matter.
Unconstitutional, you say? A Manhattan Supreme Court judge sure didn’t think so.
When I asked via twitter for affiliates in North Carolina to comment on the proposed pull out, I received a number of similar responses. One commenter summed up the sentiment nicely:
I run several web sites that sell books. I’ve been working on these sites for 2 years now, building them up with good content. At the start of June, for the first time ever, I started seeing the fruits of my efforts. I started seeing a decent return coming in from my Amazon referral fees.
So you can imagine how devastated I am now that my account is closed. My account had close to 200 outstanding orders that hadn’t yet shipped yet when the account was closed. That’s money I’ll never see. On top of that, today I checked my account (as of this writing we can still login to our accounts) and discovered that several high priced electronics had been purchased through my link. You can imagine how this made me feel. Right now I’m sitting here with a throbbing headache – I think it’s stress-related.
I hope the NC legislature removes Section 27C.2 from the proposed budget bill. I’ve really enjoyed being an Amazon affiliate and don’t want the relationship to end.
North Carolina, for its part, isn’t backing down, just as New York held its ground. The online retailer maintains that the tax is constitutional. It’s interesting that Amazon.com has chosen to argue that it isn’t constitutional in the media but so far as I know, it hasn’t made that argument in a North Carolina court. Maybe, just maybe, it’s not an argument that Amazon.com thinks actually has much merit. But then, I’m just speculating.
With one state down, Amazon.com has forged on. The online giant also cut ties with Rhode Island and today, it just announced that it will cut affiliate ties with Hawaii.
Quite the powerhouse line up (with apologies to my readers in Rhode Island, Hawaii and North Carolina). Are you perhaps seeing a pattern?
I know, I know. Amazon.com surely has some wonderful explanation for its cherry picking. I’m sure of it. And I’d really love to hear it. Because otherwise it sounds like, well, you know… that some states are just a little more valuable to them than others.
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It’s Getting to Know You Tuesday! Today’s featured tax professional is Frank “Vinny the Body” Santoro. Frank describes himself as “Preacher’s Wife (on leave), Adoptive Parent, CPA, Libertarian, Musician, Amateur Theologian, Muckraker, Instrument Rated Pilot, Cancer Survivor and Know-It-All.”
Let’s get to the interview!
1. Where are you now?
At home on the couch, logging in to work via VPN. If it were last week I would have been switching back and forth between the White Sox game and “I’m a Celebrity…Get Me Out of Here!”
2. What’s your official title and what does it mean?
Manager, International Corporate Services, Really Big Accounting Firm, Chicago (new title effective 1 July). I suppose it’s pretty self explanatory; I was already managing people, projects, and client relationships before except now I will have a firm-supplied Crackberry, be on call outside of “working hours” and will never have to share a hotel room with a colleague at training ever again. I’m basically smack in the middle of the food chain.
3. What books are on your night stand?
Mostly a pile of New Yorker magazines to catch up on – I’m only 4 or 5 issues behind right now. That and “Devil in the White City” by Erik Larson, which I finished a few months back.
4. If you weren’t working in the tax profession, what would your dream job be?
Pilot or stay at home dad.
5. What’s the last movie that you saw (DVD or in the theatre)?
“Up”. Sobbed like a baby during the introduction/backstory and never kept a dry eye for long during the rest of the film.
6. Tax is a huge subject. What’s your area of special interest?
Currently international tax for businesses. We generally split our time between advising US clients operating abroad and foreign companies operating in the US. All of our advice is from a US income tax perspective, but we often have to coordinate with colleagues in other countries to assist clients with foreign tax advice. A good deal of my work focuses on foreign tax credit or tax treaty issues.
In my last gig I specialized in religious nonprofit and charitable gift planning tax issues, which is an even more esoteric area than international.
7. What’s the best tax or financial advice that anyone ever gave you?
Never borrow money to buy a depreciating asset.
The best advice my wife ever got was when she was about to enter the ministry (she’s an ordained United Methodist pastor). A good friend told her she needed to get a good CPA. So she married me.
8. Coffee or tea?
Tea (green or caffeine free), although I have been known to drink coffee socially on occasion.
9. Name five artists on your iPod (or mp3 player).
These days I mostly have podcasts for the daily train/bus ride, but I do have Stephen Colbert’s Christmas Special and “Full Tilt”, the latest album from Lil’ Ed and the Blues Imperials. And I can go from “Whad’ya Know” to “The McLaughlin Group” to “Car Talk” to “Savage Love Podcast” to “Planet Money” without batting an eye on my commute, although I have had to teach myself to not laugh out loud at Dan Savage’s comments on the train.
10. What would I be surprised to know about you?
- My favorite genres of music are old school rap/hip-hop (Kurtis Blow, Grandmaster Flash, Fat Boys, Run DMC) and bluegrass. No cognitive dissonance, I swear!
- My wife and I met in the Seed and Feed Marching Abominable, Atlanta’s only street theatre cum attack marching band.
- I am a testicular cancer survivor.
11. What college did you attend (in what subject)?
I started at Loyola University in New Orleans on a music scholarship, but halfway through decided to switch to accounting. I thought since I was good at math it would logically follow that I would I would enjoy accounting. Wrong!!! All I can say is thank God for tax (Editor’s note: Don’t we all?). I finished my undergrad and Masters in Tax at Georgia State University in Atlanta.
12. If you had the opportunity to make one change in the tax code tomorrow – an extra credit, a disallowed deduction, whatever – what would it be?
I would say change the US tax system from a worldwide income basis to a territorial basis (i.e., you only pay tax on what you earn in the US). But then I would probably be out of a job. How about denying a deduction for companies who advertise on reality TV and cable news talk shows?
13. What’s the best thing on TV right now?
Ninja Warrior / Sasuke and Unbeatable Banzuke on G4. My wife complains that I often turn up the volume despite the fact that the announcer is speaking Japanese and I don’t understand a word of it. Or anything on Current TV.
14. What do you think Congress will repeal first: estate tax or AMT?
Neither, although I think more meaningful moves will be made to lessen the “collateral damage” from the AMT. The estate tax is here to stay but maybe with a pretty decent exemption (somewhere in the $3-5 million range)
15. If Uncle Sam handed you a huge refund check right now, what would you do with it?
Either buy a share in a flying club or start our next adoption, depending on who opened the mail.
16. Biggest tax newsmaker: Obama nominees, UBS or TARP?
The UBS story will be a blockbuster if the DOJ backs off like the Times claims. Otherwise TARP, but it’s much more boring.
17. And, other than taxgirl, what’s your favorite tax related web site?
TaxProf Blog, but I also follow re:The Auditors on public accounting issues in general.
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Thanks Frank!
You can follow Frank at his blog at http://vinnysgotcancer.blogspot.com – a word of caution: it’s not as frequently updated now as before (but still looks to be a good read).
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No, I’m not really moving. And no, taxgirl.com isn’t going anywhere. What is happening is that I’m shifting my focus from a Facebook “group” to a Facebook “page.” It simply makes more sense for the blog.
If you’re interested in keeping up with even more taxgirl excitement (including some extra polls and discussion), please follow me on over to my new Facebook page. I hope you’ll become a fan!
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