Thousands of PA publishers lose their affiliates to tax law overnight. Is your sate next?

This action has been postponed till September.

It has been brought to my attention that my, and several other thousands of public and privately owned Pennsylvania E businesses are about to become 100% non functional overnight starting January 31st, 2012. Below is an affiliate letter directed to myself, stating that they must cancel their partnership with my site, driverstorer.com:

Newegg correspondence to PA Internet sales affiliate

The long and short.. Pennsylvania is forcing all participants in E commerce to charge sales tax for their state, to form an “even” playing field between the E-tailers and “brick and mortar” stores within the state.

LET ME EXPLAIN HOW E COMMERCE WORKS… to name a particular example that takes place probably one million times over the internet, every day:

Person A (who lives in state 1) purchases a product from a merchant website, headquartered in state 2, through a promotional code link, or banner advertisement from a website headquartered in state 3.

To further clarify.. Matt lives in Illinois, visits driverstorer.com hosted in California (but the site owner lives in Pennsylvania), clicked on a promo code ad to Newegg.com, and purchased an item from Newegg.

DOES THIS MEAN THAT ALL STATES INVOLVED ARE OWED SALES TAX?

GET REAL.

The PA law states that driverstorer.com (and every other website operated out of Pennsylvania, even if the server isn’t in Pennsylvania) is no longer allowed to pull commissions from Newegg (and every other E-tailer for that matter)  sales because PA is not receiving sales tax from the transaction.

If similar laws become active across the country, the entire structure of internet advertising in general is in jeopardy because it follows the same principle:

Company A pays Google to host advertisements on affiliate’s websites, and person B clicks on these ads and purchases something from company A’s site. Company A, Google, the publisher, and person B are now all responsible for sales tax?

HOW IS THIS FAIR??

This is a quote from the Pennsylvania Dec. 1, 2011 “Revenue Department Clarifies Existing Sales Tax Nexus Law for Remote Sellers”

“It’s simply a matter of fairness under the existing law, and it’s essential that both e-commerce

retailers with nexus and brick-and-mortar stores in Pennsylvania, many of which

are small businesses employing thousands of Pennsylvanians with retail jobs, are

treated equally.”

Fair? Welcome to 2012. To own and operate a successful business now a days you must diversify your portfolio to internet sales.. or have that “brick and mortar” business that does not rely on something that can be purchased from the internet.

This statement from the Pennsylvania Revenue department is another example of the government favoring large businesses and corporations, to keep society entrenched in their mundane retail jobs. Why on earth would anyone work in a retail store for $7.25 AN HOUR when a single affiliate click can be worth over $20, a dozen times a day over?

Now is the time to ACT AS UNITED STATES CITIZENS. Contact your local Pennsylvania congressman/woman and express your detest for this declaration. Thousands of individuals and businesses are going to loose all of their revenue overnight. They are trying to force us back into retail stores earning minimum wage. They are trying to force you, the consumer, into higher priced goods through multiple levels of taxation. Write about it in Facebook, forward this article to your friends, blog about it, do everything you can to get the word out.

Pennsylvania may be the topic now, DON’T wait until similar legislation hits YOUR STATE.

Let’s take a look and see how many times an item purchased from Newegg or Best Buy through an affiliate can potentially be taxed under this scenairo:

1) Newegg has to pay sales tax to the state it resides in
2) Newegg pays its federal income tax at the end of the year
3) I (publishers) would have to pay sales tax to PA
4) I (publishers) have to pay federal income tax at the end of the year on those sales
5) The purchaser has to pay sales tax
6) I would have to pay state Income tax at the end of the year AND LOCAL income tax on my revenue (so that’s 7) to PA at the end of the year
8 ) This sets the stage for a federal sales tax

This means that a single item purchased from Newegg, or any other online merchant, can be taxed 7 OR 8 TIMES when it is sold.

Matthew Storer,

Driverstorter.com Owner and Administrator, Engineer, Webmaster

USE THESE FANCY LIKE AND SHARE BUTTONS BELOW. GET THE WORD OUT.