Amazon.com announced yesterday that it won’t be paying the price of affiliate advertising in North Carolina if the state uses it to assert nexus for sales tax collection. It will stop using affiliates in the Tar Heel state, which is what Overstock did in New York when the state was considering the affiliate nexus approach.
States are wrong-headed when it comes to asserting tax nexus just because some companies use a web-based network of affiliates to help advertise their products. As I’ve discussedbefore, affiliates are more akin to in-state advertisers, not sales reps.
Furthermore, states that pass these affiliate nexus bills really end up hurting in-state companies that rely on Internet advertising. At a time when companies are struggling for ways to make money on the Internet, we think now is a particularly bad time to tax Internet marketing.
North Carolina’s affiliate nexus tax proposal is #4 on the NetChoice iAwful list of bad legislation. We think it should stay outof the affiliate tax jungle. It’s constitutionally messy, bad policy…and as Guns ‘N Roses mildly stated, it’ gonna bring you down- huh!