LinkConnector sent a message out to their merchants with recommendations on how to react to the New York affiliate tax, which comes into play on June 1, 2008.
- Determine if this law actually applies to your Affiliate Marketing program. It is the opinion of LinkConnector (and many others in our industry) that most campaign designs will not even subject you to this law. If you are running a pay-per-click, per-per-go, pay-per-call, pay-per-lead, or pay-per-impression campaign; your NY affiliates are simply advertisers and running this type of Affiliate Marketing program may not subject you to the new requirements of this law. If you are running a pay-per-sale campaign, there are further actions you can take to protect yourself.
- Design a better pay-per-sale campaign. If a pay-per-sale campaign is best for you (and no other type promotion will work for your NY affiliates), you can take steps to protect yourself from this new NY law. As long as your affiliates do not specifically target NY state residents; your pay-per-sale campaign, by itself; does not subject you to the new law. By building specific restrictions into your LinkConnector campaign level Terms and Conditions (and enforcing them with our assistance), you should be able to provide enough evidence to the state of NY to eliminate your need to collect local and state sales tax for NY sales. A New York affiliate having a website link to your site isn’t enough to require you to start collecting additional taxes. The NY affiliate must also target NY residents (e.g., sending out flyers promoting their website, sending e-mails, possibly setting up an SEM campaign that specifically geo-targets NY residents, etc.).
- Run an unrestricted pay-per-sale campaign. If you don’t wish to restrict the specific behaviors of your NY affiliates, LinkConnector can help you determine the volume of sales attributable to NY affiliates. We can send you a report for past months of all Order IDs attributable to NY affiliates in LinkConnector. For those merchants who would like to access the data real-time, LinkConnector can help you set up your campaign to provide the information necessary to access such a report. Either way, merchants are able to determine whether or not they meet the threshold of the NY law and are required to collect sales taxes when selling to NY customers.
Choots Humphries, Co-President of LinkConnector, encourages merchants to contact him with any questions.