Idaho Lawmakers Looking for Online Sales Tax Solution in all the Wrong Places, According to the Idaho Affiliate Alliance.

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Idaho Online Sales Tax Bill will hurt hundreds of small businesses in Idaho and will not produce the tax revenue lawmakers are hoping for.

The Idaho State Legislature is reviewing a bill that – if passed into law – would allow sales tax to be charged on purchases made by Idaho residents with online retailers like amazon.com. The intent is to increase tax revenue by applying sales tax to online purchases. Lawmakers are also aiming to help protect local retailers by leveling the pricing playing field between online and brick-and-mortar purchase options.

The basis for the bill is that these online retailers should have to collect and remit sales tax because they have a “de-facto” physical presence in Idaho through their affiliate-marketing relationships with Idaho-based bloggers (this relationship is often referred to as “affiliate nexus”).

According to Heather Wheeler, member of the Idaho Affiliate Alliance, this law won’t accomplish what lawmakers are hoping for. “In other states where similar laws have been passed, many online retailers – like amazon.com – have simply terminated their relationships with affiliate marketers rather than track and remit sales tax to the state.”

Examples of states who have passed similar Nexus laws (source, Performance Marketing Association):

California: law effective 7/1/2011, affiliates removed 6/29/2011
Arkansas: law effective 7/1/2011, affiliates removed 7/24/2011
Rhode Island: law effective 7/1/2011, affiliates removed 7/24/2011
Missouri: law effective 8/28/2013, affiliates removed 8/27/2013
Maine: law effective 9/17/2013, affiliates removed 10/7/2013
Louisiana: law effective 4/1/2016, affiliates removed 4/1/2016

The Performance Marketing Association, a nonprofit trade group who represents the affiliate and performance marketing industry, testified to legislators in Utah that when similar measures were passed in other states, 1,000 retailers stopped using Internet ad services in those states, with the result that one-third of the state’s advertisers went out-of-business, one-third moved out-of-state and one-third were forced into lay-offs or downsizing due to the reduced ad revenues (source).

Many affiliate marketers will consider moving out of state if legislation passes. Jamie Birch, CEO and founder of JEB Commerce in Coeur d’Alene, Idaho said “If a law like this passes, we would likely relocate to Montana or Washington almost immediately.” Matt Barrand who owns AThriftyMom.com with his wife Sarah Barrand added “Blogging and affiliate marketing is our family’s sole income. We’ll have no choice but to move out of state if this bill passes.”

This bill was introduced to the House Revenue and Taxation Committee by Representative Lance Clow, R-Twin Falls on Monday, February 13th, 2017.

For more information and media inquiries, please contact IdahoAffiliateAlliance(at)gmail(dot)com.

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Heather Wheeler

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