The state of Washington started taxing online purchases yesterday. Unlike the New York affiliate tax, Washington isn’t throwing affiliate marketers under the bus.
According to Washington Revenue Department spokesman Mike Gowrylow, the state law, which passed in 2007, has two major effects.
The first is that Washington is joining a national online sales-tax effort. The second is that Washington’s own tax system is changing from origin-based to destination-based for shipped goods. That is, tax will be collected based on the location of the buyer, not the location of the seller.
“This is a necessary evil. In order to join the national effort, we had to harmonize our sales tax with other states,” Gowrylow said. “We believe this is the cleanest, fairest way to do this.”
So, all affiliates can expect diminished returns for the traffic to Washington state residents. At least Washington affiliates won’t be getting the boot in this arrangement.
You can find out more about the National Internet Sales Tax (S1433, the “Sales Tax Safety Net and Teacher Funding Act”), introduced by Senator Fritz Hollings (Democrat, South Carolina) in July 1999, at http://www.businessknowhow.com/money/InternetTax.htm.