*If you do any business online, this is a must read

This is a copy of an email received from Pace Lattin this morning, 6/30/2011. If you do any online business, you MUST be aware of this threat from the various states proposing these taxes. It does not just affect large companies, but is most onerous to small companies such as yours and mine! Please feel free to post your comments on this matter.

If you are working in this industry, this is your livelihood. Don’t keep on
sitting down doing nothing until its too late.

How the Affiliate Tax will affect CPA Networks Also.

There has been a great deal of discussion of all the Affiliate Tax laws being
passed in the media. Unfortunately, thanks to a great spin campaign by companies  such as Walmart, the discussion has been focused on how these new Nexus Tax laws  will affect large companies like Amazon and Overstock. Time and time again these  new laws being proposed are called “Amazon Taxes” for the sole purpose of  ignoring the rest of the companies that will be affected when these taxes are  passed. The real truth behind the Affiliate Tax debate is that these laws will  have a profound and significant affect on almost every company in the industry,  from the largest to the smallest – but will have the greatest impact on the  small companies.

This is not an “Amazon” tax, or an “Overstock” tax, but instead a “Small
Business Tax” that has been labeled incorrectly in order that the general media
might ignore the reality of what these taxes will do to small businesses. I’ve
actually met a few attorneys who don’t quite understand the real problems with
these laws. Let’s quickly look at what most of these tax laws will do, and
explain it simply:

The laws specify that if there is any affiliate of any company making revenue
for a product in that state, then the company itself has to pay taxes for any
transaction in those states.
My explanation is purposely obtuse and vague, because in many cases so are the
laws that are being passed. The definition of a transaction or purchase is not
very specific and thus is extremely problematic. This means that anyone engaged  in any sort of ecommerce, whether it is sale of a product, promotion of a  program, signups to site, in theory could be forced to pay those states taxes.

Thus if you are CPA network promoting a product and you have affiliates in those  states, you may be liable for taxes in those states. Why? Because as anyone who  is in this industry knows, the definition of who is selling the product, versus
what a network is and even what a publisher is, is often difficult to pin down.
Sometimes affiliates of CPA Networks are the publisher, sometimes they are just
a PPC buyer, and sometimes the network is a publisher of another network. With
all the connections, who is to say what establishes the nexus? Don’t expect
States that are desperate for money to actually define this for you, but instead
send any company that has any affiliates in that state, anyone that reports that
their money is made from marketing, tax bills. We are their new “banks.”

Even if we knew the answer definitively to the different questions, many
companies, from lead generation firms to dating sites are going to start
avoiding CPA networks in those States for that specific reason. They do not want
to risk that working with a company in a certain State will somehow cause a
nexus and thus require them to file paperwork, file additional taxes. They’d
rather make it easy and work with someone else.

Thus, as I started, the victims here are not the Amazons of the world. They are
the small businesses. Most CPA networks are just that: Small businesses, with a
few employees, working hand in hand with their affiliates to create valuable
opportunities for their advertisers. They, along with their affiliates will
suffer the most. These taxes are aimed at our industry, our friends, our
community and our businesses. If we continue to allow them continue without
standing up, supporting those people who are fighting, it is very possible in a
few years we all will wish we did.

Pace Lattin

This message was sent to vernvt@aol.com from:
Denmar Management, LLC | PO Box 108 | Norwood, NJ 07648


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