State of NC killing Online Affiliate Business

[Gerry]

I absolutely love the state of NC, living here and being a couple hours from the mountains and a couple of hours from the sea.

In today's mail, I got a letter from Sierra Trading Post (great bargains and PPC) that they were suspending all NC affiliates accounts because ...

the state of NC wants them to start withholding sales tax and tax income I make as an affiliate.

First I get an email from Amazon notifying me of account suspension as they refuse to abide by the terms and, essentially, do the state of NC's bookkeeping for them. And today it is Sierra Trading Post.

It was either Commission Junction (CJ) or Linkshare that I got accepted as an affiliate. This raises further concern that many more letters/notices are to come.

Now, more than ever, it is looking like I may go across the border to Virginia and get a mailbox at a post office or use an online service.

This could (is) snowballing and might get me suspended on many more affiliate accounts.

If anyone else has any suggestions, let me know.

[south]

Vote Libertarian.

[Gerry]

I am able to sign up for and pay for an USPS box in another state.

However, I have to print out the application and take it to the post office I signed up for.

It is nearly 27 miles away across the state line in Stuart, Virginia.

Very mountainous terrain and winding drive. But, gorgeous scenery.

[south]

Honestly Doc, you would have to check with the laws in your state. Perhaps you could setup a corporation there (Virginia), or Delaware, or Florida, and put your affiliate sites under ownership of the corporation. Then again, NC may still require taxes from you. Do you have a state income tax? Would it be considered tax evasion? No telling. Maybe check with a tax attorney in your state.

Edit: The more I read about Delaware Corporations, the more I would consider that if I were in your position.

[Gerry]

Honestly Doc, you would have to check with the laws in your state. Perhaps you could setup a corporation there (Virginia), or Delaware, or Florida, and put your affiliate sites under ownership of the corporation. Then again, NC may still require taxes from you. Do you have a state income tax? Would it be considered tax evasion? No telling. Maybe check with a tax attorney in your state.

Edit: The more I read about Delaware Corporations, the more I would consider that if I were in your position.

I can get a PO Box in the state of Virginia (I have already applied online).

I am a registered LLC in the state of Delaware. But, I want a PO Box close by that I can actually go physically check. And, I'll just change some account addresses to point there.

As for taxes, yes - I pay them annually and claim all income.

All payments are via PayPal and as far as I know these companies are going by my address.

I'll speak to a tax attorney tomorrow.

The biggest concern is this taxation spreading to other states that those affiliates start getting dumped. This really sucks. But I do not blame the merchant at all for this. Charging residents state tax on purchases is one thing but mandating that the merchant withhold and file taxes on behalf of the affiliate is a little too much. The state is essentially views the merchant as an employer.

[south]

I can get a PO Box in the state of Virginia (I have already applied online).

I am a registered LLC in the state of Delaware. But, I want a PO Box close by that I can actually go physically check. And, I'll just change some account addresses to point there.

Might be easier to just have the P.O. Box forward everything to your NC address. If the USPS won't do it, maybe one of the myriad of private postal centers would do it. Also, consider receiving all payments through ACH or Paypal. Only one affiliate program I am in still sends me checks. Adsense, CJ, etc all put it directly in my bank account. Parked revenue comes in through paypal for what it's worth. Then I just transfer it to the bank.

I'll speak to a tax attorney tomorrow.

Yes, know what's legal first.

The biggest concern is this taxation spreading to other states that those affiliates start getting dumped. This really sucks. But I do not blame the merchant at all for this. Charging residents state tax on purchases is one thing but mandating that the merchant withhold and file taxes on behalf of the affiliate is a little too much. The state is essentially views the merchant as an employer.

Agreed. I fear it will be inevitable in due time though. With the amount of spending & debt, coupled with lower tax revenues from falling house prices & sales tax declines, the states are sure to start taxing internet business eventually.

[Gerry]

Agreed. I fear it will be inevitable in due time though. With the amount of spending & debt, coupled with lower tax revenues from falling house prices & sales tax declines, the states are sure to start taxing internet business eventually.

I have not kept up with it, but New York and Pennsylvania were considering what many call the iPod Tax which essentially was a tariff placed on top of downloading fees.

And, of course, there is the proposed Botax (play on word Botox) which taxed all elective cosmetic surgery.

What we are seeing are states and municipalities scrutinizing consumer habits. Even in tough times, those that have some bucks download ringtones, songs, and those that can afford it get a tummy tuck, nose jobs, etc.