The NC government hates small businesses, apparently. They are also planning to start making LLCs pay corporate franchise taxes. It's disgusting what our state leaders are doing to kill the spirit of entrepreneurship in this state.

Hopefully I can count on those of you who feel the same way to vote for me in my next run for public office here!

Links:

• http://www.philrhodes2008.com

posted 5 months ago

North Carolina is not friendly to small businesses! My one man company is a LLC and I will be penalized with even more taxes because I am a LLC. My work is primarily service oriented in the video production and still photography fields and I fear that the next step will be to tax all service industries in the future and that we will have to pay sales tax on services as well as products. That may be the final nail in the coffin for many small businesses in North Carolina. At some point small business owners may have to stage a "Raleigh Tea Party" at the Legislature building and protest this movement towards more taxation!

posted 5 months ago

I've never really understood how states think they can tax their residents on this. Here's the problem... Why not put the website or even the corporation in a state that doesn't tax them? In the end people will get smart and the states will lose out. Just my personal opionion anyways :)

Links:

• http://webspider.com
• http://webspider.com/WebStoreSignUp.aspx

posted 5 months ago

It's not immediately clear in the links I looked at what the deal is--if you sell a book through an affiliate link, the state declares that you are a business location, and therefore wants Amazon to collect the sales tax? Which Amazon doesn't want to do, because sales tax is a huge PITB, but every on-line retailer with real stores has managed to figure out. Staples, Coldwater Creek, Sears, you name it. They all do sales tax when you order on line.

Amazon could do this, without too much trouble. They just don't want to. Which suggests to me they are actually trying to force the issue of resolving sales tax on internet-only sales by roiling the rabble, so to speak.

I don't have any trouble with not paying sales tax on internet stores but I really don't see it as being fair to businesses that happen to have in-state retail establishments. IMO, the question that really matters is, do ANY of those affiliates use ANY state services paid for by other people's tax money? Like the court system... or the schools... or roads. Who do you think ought to be paying for services we expect the state to provide?

Perhaps I would feel a little differently if I were certain that each and every Amazon affiliate were reporting that affiliate income on the state tax returns. Hmmm... why do I have doubts? (IANAA at this time; I don't know how the money arrives so maybe Amazon handles this and reports the payments to the IRS, too... If so, I take it back.)

All I needed was one 911 call to realize I have received vastly more benefit from public services than I will ever pay in state taxes. YMMV.

posted 5 months ago

Individuals are required to file on their end-of-year tax return the amount of purchases they've made online. I don't know anyone in NY who reported their annual Amazon.com purchases before that state mandated Amazon.com to begin collecting sales tax through a similar loophole. Obviously this was ANTI-COMPETITIVE for small businesses who did not have a large, online presence.

Will it hurt small businesses? Not as much as it helps them. One of the reasons individuals shop online for big ticket items is the ability to dodge the tax man. Now if the cost of shipping is all that stands in their way...well, perhaps some businesses will lose, but others will possibly gain. If nothing else, the *government* makes out by having more funds to feed off. In the end, that's all that really matters to them: Having a bigger budget to control and dole out as it sees fit.

posted 5 months ago

Could Amazon pay those taxes? Yes, although it would be a hassle to start doing it for a couple states.

The bigger problem for them is that the bill as it stands could require them to pay state taxes on everything sold to NC residents since they launched in the early 1990's. Imagine getting that HUGE tax bill.

I understand why local businesses would want it, although to be honest, I think the shipping charges quickly eclipse any amount the consumer saves by not paying sales tax.

People buy on the internet because they don't have to wrestle that big TV into the car or stand in line on their day off--plus that's where they're doing their research on what to buy. I'm certainly not saying that's fair to local businesses.

These taxes--because they're NC only--puts NC business owners at a disadvantage. For example, if you're an NC resident and you're trying to decide between a $1,500 teleseminar training series--are you going to choose the NC business that's offering it, knowing you'll have to pay almost $100 in taxes--or an out-of-state competitor?

I think you'll also see companies that continue to have affiliates in NC providing less support to those affiliates because of the extra hassle. Sure, with an Amazon book you're talking a couple dollars of affiliate commission. But you've got sites popular sites like Clickbank where the commissions may be much more significant.

And then there's the large programs put out by some internet marketers, who offer $1,000 commission for each referral. Now they have to pay a couple hundred dollars in sales tax on top of that commission if the person lives in NC--and I'd assume NC affiliates probably have a higher chance of referring other NC residents. Think they're going to be eager to keep or support those NC affiliates?

And THEN there's the potential scenario of the NC business having affiliates elsewhere. Will their affiliates, who live in different states, have to pay sales taxes on sales to NC residents because they're considered an extension of that NC business since that's what they're proposing with Amazon?

And of course, for every program that pulls out, the state is not only NOT getting the sales tax, they're losing the income tax revenues those NC affiliates would have made.

Karen, by law Amazon (or anyone) has to do a 1099 for any affiliate that makes more than $600 from them in a year. So it would be really stupid for a business owner not to report it.

And if you want a simple explanation of what's going on, there's a link to a post I wrote below. The issues are really twofold--a new tax on digital products (iTunes, ebooks) and seminars/events--and the Amazon issue. The digital products one will affect everyone living in NC.

In short, while I'm not for them, it would be an easier pill to swallow if these taxes were being instituted in all states. The biggest problem is that it puts NC consumers and businesses at a disadvantage.

Links:

• http://compellingmarketingblog.com/wp-admin/post.php?action=edit&post=702&m...

posted 5 months ago

Unfortunately, several retailers decided today to end their affiliate relationships with North Carolina residents, including Amazon because of this change to the definition of 'nexus'.

I would suggest getting in touch with Matt Enders as he has been spearheading the fight against the 'Amazon Tax" in North Carolina. You can also do a search on twitter for the hashtag #ncaffiliatetax for others in the same position.

Links:

• http://search.twitter.com/search?q=%23ncaffiliatetax

Karen G also suggests this expert on this topic:

• Matt E

posted 4 months ago

A mortgage payment on an Amazon affiliate is very impressive. While their rates for electronics are higher, most come out to a measly 4%. Hopefully this will be the push for people to build their own products and create their own on-line brands! Much better to be the one paying an affiliate 4% than the one dependent upon that income. Perhaps this will put an end to the massive amounts of affiliate email spam I get.

posted 4 months ago

Yes, this is real. Yes, it is a real threat to thousands of small business owners and individuals across NC. Here are the sides of the story:

NC Gov't says it is unfair that online retailers do not have to collect sales tax while local B&M stores do. NC Gov't also thinks they will gain $13.1M in tax revenue in year 1 and about $18M per year after that.

Affiliates who live in NC earn money for referring sales to an online retailer. Many do this full time as their career; many more do this as a way of supplementing their income for needed expenses. If the law passes, hundreds of online retailers WILL terminate their relationships with tens of thousands of NC affiliates. some programs have already taken this preemptive step, including Amazon.com and at least 10 others. This means many NC residents/affiliates have already lost significant income. What does that mean?

- There will be no sales through NC affiliates to collect sales tax on. There goes the estimated $13.1M.
- NC affiliates will move out of state to keep their businesses running (they can't just incorporate elsewhere as their physical presence in NC creates nexus). This means less income tax collected by NC, less property tax collected, and less spending in the local economy.
- Those who do not move out of state are now unemployed, contributing to further unemployment rate increases and additional draws on the unemployment system of compensation.

Sales tax should be collected for all online sales, just not on a state by state basis. It has to be done in a coordinated effort across the nation so that residents of all states may continue to participate in affiliate marketing. There is a movement, which NC supports, to this end called the Streamlined Sales Tax Project. See the link below for details. This is the solution.

In NC, we are fighting this tax bill very hard, so that we can keep affiliates employed in our state. We need all the help we can get. Please see the following links for details on what you can do to help.

Links:

• http://www.mgecom.com/affiliateblog/corporate-news/taking-the-advertising-t...
• http://blog.linkshare.com/2009/07/02/north-carolina-affiliates-share-your-s...
• http://www.streamlinedsalestax.org/

posted 4 months ago