When Will New York Introduce A Google Tax?

Today’s news is that Overstock have decided that they are axing 3400 affiliates in the New York area because of the previously reported “Amazon Tax” – which Amazon are fighting.

I think Janet was the first to break the news of the Overstock changes

This is a story that both Linda at 5 Star Affiliate Programs and Shawn’s Affiliate Blog have been covering in depth.

The New York Times also has coverage and been giving out some great links.

Techcrunch has a Scribd copy of the original Overstock posted letter (Shawn posted the email)

The New York Times reports that

Linda is also reporting that this may soon affect California as well (there are lots of affiliates in California, they like the beaches)

On the good side, this may soon affect our good friend Jason Calacanis, who as a new affiliate I am sure was hoping to make some money from reputable sites such as Overstock.

The Times reports this will affect large affiliates in New York such as NextJump, Jellyfish and Entertainment Publishing, the unit of IAC/InterActiveCorp that prints discount coupon books.

So Why The Google Tax Headline?

This isn’t specific to Google, it could be any website advertising.

Google have a referrals program for various products

If you run Google Adsense on your blog, you are in many ways an affiliate of Google’s advertising program, you are selling traffic on their behalf.

So Where Would It Be Taxed?

Lots and lots of options

  • California – Google’s primary location
  • Where the servers are located
  • Anywhere Google has a physical presence (everywhere?)
  • The location of the company buying the advertising
  • The location of the servers of the company buying the advertising
  • The location of the person clicking an advert, or maybe the proxy server, or the company that is billed to
  • The location of the publisher displaying the ads

Adwords advertisers in the EU have paid VAT since 2003 – I believe there is something similar in Taiwan
Adsense publishers in the EU if required can issue Google with a VAT invoice

As far as I am aware, no sales tax is charged in the US at any point in the chain.

As soon as you start down the rabbit hole of online business, the lines get blurred

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  1. says

    Personally speaking I wouldnt be surprised if this was high up on the priorities I mean (without sounding cynical) anyway for the governments of the world to tax their citizens further more.

  2. says

    I guess it’s time for me to move out of the country, lol. Or host my sites somewhere else. Or convert all sales to e-gold and count it as a business loss. There has to be some trick.

  3. James D says

    Don’t give them any ideas. This is going to destroy small businesses only which have hired more people then big business have in the last 10 years or more.

    My boss at my company does not care really but small business owners do.

  4. James D says

    FYI Jellyfish is in Wisconsin, I just spoke with a sales person there 2 days ago.

  5. says

    Personally I wish that the U.S. Federal government would deal with this and get it over with by enforcing a federal internet sales tax and then prohibiting further taxation by the states. But the spineless bastards don’t want to deal with it because new taxes are seen as poisoned fruit.

    As it is every town has it’s own local rate along with different rates for all of the states. Keeping a patchwork sales tax straight is just about impossible for an internet biz – even if you wanted to.

    BTW, I don’t like taxes any more than the next guy, but what’s worse is uneven enforcement of unfair or convoluted rules.

  6. says

    Wow, this totally stinks. I am glad I don’t live in New York or California. I hope Texas keeps from going that route. Texas tends to be fairly conservative, so I imagine it will take most of the other states adopting similar laws before Texas does. Still it’s making wonder about re-incorporating in a different country…

  7. says

    Thats crazy. Luckily im not based in the US, but a business as small as mine would suffer. Would be as simple as hosting your sites elsewhere and not using Google Adsense to avoid it?

  8. says

    Damn, leave it to the government to screw up a good thing. I live out of the US, and do some affiliate business, but I’m sure even the PPC guys are on the politicians radars next. I can’t imagine any of the possible outcomes here will turn out well for small internet business folks.

  9. says

    wake up and smell the money. yet another way to milk cash out of nowhere. it seems that everything online is almost taxable. there are a lot of people in the chain would suffer, even others overseas.

    head on to http://www.TheAdsenseKing.com for Free Adsense Training + Unreleased Video
    Worth $97!

  10. says

    Incorporate in Delaware it easy.
    The affiliates in New York are already paying income tax and state income tax on their earnings. Is this taxation without representation?

    The state gets 7%-8% sales tax and then gets another 4%-8.14% state income tax from the affiliates earnings. How much are the corporate taxes in New York? Do companies operating in New York yet incorporated in other states have to pay tax on their net from all operations nation wide.

    Is New York regulating EBAY, PayPal, craigslist….