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Affiliate Tax Problems and Network Marketers Too…

Recent sales tax  law changes have caused some huge income problems for many online affiliate marketers.  Due to the stalled economy, states and local governments are looking for many extra methods by which to raise operating cash, both now and ongoing.

This taxing ‘idea’ has also recently affected network marketers in the state of California.  (yes, I’m serious….)

“The California Assembly passed SB 17 on a majority vote yesterday (June 28th) which contains a provision for a 3% withholding on independent contractors. If this bill becomes law… (ALL Network Marketing Companies) will be required to withhold 3% of your monthly check and remit this amount to the state. ”

(source: Aces Radio Live)

Here are some stories (and opinions) about this unfortunate decision:


I honestly don’t know if this has become law yet.  Anyone from California is welcome to advise…

And the ClickBank Press Release
ClickBank Stands by Affiliate Marketers
Despite New Tax Laws

BROOMFIELD, Colo.- August 10, 2009 – ClickBank officials
will continue to work with affiliate marketers in states
that are enacting new laws to tax the marketers’ sales,
while Amazon and Overstock.com, among others, have been
moving swiftly to halt their business relationships with
affiliate marketers in various states because of the
new tax implications.

In late June, Amazon terminated its marketing affiliate
program in North Carolina after a new law took effect
that will tax affiliate sales, and on July 1,
Overstock.com notified affiliates in Hawaii, North
Carolina and Rhode Island that it would immediately
cease doing business with them because of similar
new tax laws.

But ClickBank, a major online retailer, says it has
no intention of terminating relationships with
affiliates in certain locations or discontinuing
its longstanding policy of collecting and remitting
taxes to the appropriate tax authorities in various
domestic and international jurisdictions.

“We will continue to honor sales agreements with
affiliates in the U.S. and abroad, despite new
taxes that are being levied against them for
sales and marketing efforts,” said Dush Ramachandran,
vice president of sales, marketing and business
development for ClickBank.

“One of the benefits of being a ClickBank affiliate
is that you can operate wherever you live,” said
Ramachandran. “We don’t want to place limits on
that now. Our affiliates deserve the opportunity
to earn income regardless of where they live, and
ClickBank will continue to support them in their
efforts to do so.”

New state tax laws aim to collect sales tax
revenues from affiliates whose marketing activities
lead to ecommerce sales. The key issue is whether
the affiliates have a physical presence in a state
that taxes ecommerce activities. The state of New
York was the first to enact such tax laws, and more
states are following suit.

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