For years I have been paying sales tax (VAT) on purchases I make online through services such as Clickbank. It is inconvenient but it is much easier for Clickbank to work this way then to have to monitor the location of a seller and buyer.
The general rule in the US, as far as I can determine is that if you have a business presence in a state, you have to pay tax there. This applies if you own your own servers in the sate, or if you have employees.
Thus it might be beneficial for me, living in Europe to only rent servers, and to avoid hiring someone from the US as a full-time employee.
The New Law Amazon Is Fighting Affects All Affiliates
The chances are if you have an affiliate program, that at least one of your affiliates is based in the New York area.
If the logic Amazon is using is correct then anyone with an affiliate program is going to have to pay tax in NY, even if a sale is made though an affiliate link owned by a non-NY resident.
Impossible To Determine If Affiliate Has NY Presence
Whilst it is possible to limit an affiliate program to only affiliates from outside New York, it would be extremely hard to police.
An affiliate themselves could have employees in NY, or run servers there.
Can of Worms
Ultimately it seems to me the only fair way to handle things is an all or nothing approach. Tax all internet sales or none of them to New York residents.
If you run an affiliate program yourself, it might be time to consult your tax and legal advisors.
For more in depth coverage from a couple of weeks ago please refer to:-