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Hello - I am new to WA (and affiliate marketing) and a resident of the state of Minnesota. I have learned that Minnesota has laws in place that identify sales made through affiliat
Minnesota tax law & affiliate marketing - any advice?
Hello - I am new to WA (and affiliate marketing) and a resident of the state of Minnesota. I have learned that Minnesota has laws in place that identify sales made through affiliat
If you're worried about living in a state where Amazon prohibits affiliation, you shouldn't be if Minnesota residents are allowed to. Now, depending upon if your business and personal assets are separated, you'll still have to claim taxes on money made here; it just depends on if you file them together or separately. So, yes, you must report earnings to the IRS.
Thanks for the reply DroGodina. I am not so concerned about paying taxes on the income I earn by being an affiliate. I will take care of that. The question is more about the state of Minnesota forcing companies to pay Minnesota sales tax that don't even have a presence in the state. Typically, if an item is purchased online and the company selling the product does not have a presence in the state that the buyer lives in - there is no sales tax. Not the case in Minnesota (and several other states I believe) where if a product is purchased through a link from an affiliate website - and the affiliate is a Minnesota resident, the state of Minnesota wants their cut.
If Amazon actually banned affiliates from Minnesota at one time (they don't ban Minnesota affiliates now though), how much of an issue is this in the industry? Do companies who work with affiliates tend to stay away from or outright ban affiliates from Minnesota or these other states? That is really the thrust of my question. Thanks.
It's affiliate marketing; you'll only have to report your earnings. If you mean to say whether Minnesota charges Wealthy Affiliate or Amazon, probably not. Also, reporting your commissions is easier if you send them to PayPal. :-)
Thanks again. But the question is not related to paying taxes on my income - I can easily track that and take care of my tax responsibility.
It centers around companies that wouldn't normally have to charge their customer's a sales tax, (the company is paying the sales tax, not me).
I will try to explain how this law works - with the hope that I do a good job and that it clarifies what it is I'm trying to discover.
If Amazon sold a product to a buyer that lives in a state where Amazon wouldn't normally be required to charge a state sales tax in - and that buyer made a purchase by going directly to http://Amazon.com - there would not be a state sales tax charged to that customer. Online purchases are normally only charged a state sales tax if the company selling the product has a physical presence in the state that the buyer is a resident of.
BUT, if a customer, IN ANY STATE - even a state that the company wouldn't normally charge sales tax in - purchased an item on http://Amazon.com through an affiliate link - and that affiliate is a Minnesota resident - then, Amazon is obligated to pay the Minnesota state sales tax on that purchase because the agent which precipitated and caused the sale was connected to Minnesota - EVEN IF the buyer is a resident of a state that wouldn't normally be charged sales tax. I know it's confusing, and I have my opinions about such a law that I'll keep to myself - but there it is.
I am assuming Amazon banned Minnesota affiliates in the past because 1.) they didn't want to charge their customer's sales tax just because they came through a Minnesota resident's affiliate site, 2.) they didn't want to adjust their systems to account for this Minnesota law, 3.) they didn't want to absorb the cost of the sales tax themselves if they weren't going to pass it along to their customer, or 4.) for any combination of reasons above.
I am using Amazon as an example in the above statement. The truth is this law applies to all companies who utilize affiliates - it is not just Amazon. The good news is that Amazon has in fact allowed Minnesota affiliates back in. But the issue surrounding this Minnesota state law remains. I'm not far enough into WA yet to know what kind of obstacles I might run into - if any - which leads to my question, is their a bias against affiliates from Minnesota among companies that utilize affiliate marketing because of this law?
For way too much information re: the law I am referring to you can visit this site:
http://thompsonhall.com/minnesota-affiliate-marketing-laws-affiliate-nexus-tax/
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If you're worried about living in a state where Amazon prohibits affiliation, you shouldn't be if Minnesota residents are allowed to. Now, depending upon if your business and personal assets are separated, you'll still have to claim taxes on money made here; it just depends on if you file them together or separately. So, yes, you must report earnings to the IRS.
Thanks for the reply DroGodina. I am not so concerned about paying taxes on the income I earn by being an affiliate. I will take care of that. The question is more about the state of Minnesota forcing companies to pay Minnesota sales tax that don't even have a presence in the state. Typically, if an item is purchased online and the company selling the product does not have a presence in the state that the buyer lives in - there is no sales tax. Not the case in Minnesota (and several other states I believe) where if a product is purchased through a link from an affiliate website - and the affiliate is a Minnesota resident, the state of Minnesota wants their cut.
If Amazon actually banned affiliates from Minnesota at one time (they don't ban Minnesota affiliates now though), how much of an issue is this in the industry? Do companies who work with affiliates tend to stay away from or outright ban affiliates from Minnesota or these other states? That is really the thrust of my question. Thanks.
It's affiliate marketing; you'll only have to report your earnings. If you mean to say whether Minnesota charges Wealthy Affiliate or Amazon, probably not. Also, reporting your commissions is easier if you send them to PayPal. :-)
Thanks again. But the question is not related to paying taxes on my income - I can easily track that and take care of my tax responsibility.
It centers around companies that wouldn't normally have to charge their customer's a sales tax, (the company is paying the sales tax, not me).
I will try to explain how this law works - with the hope that I do a good job and that it clarifies what it is I'm trying to discover.
If Amazon sold a product to a buyer that lives in a state where Amazon wouldn't normally be required to charge a state sales tax in - and that buyer made a purchase by going directly to http://Amazon.com - there would not be a state sales tax charged to that customer. Online purchases are normally only charged a state sales tax if the company selling the product has a physical presence in the state that the buyer is a resident of.
BUT, if a customer, IN ANY STATE - even a state that the company wouldn't normally charge sales tax in - purchased an item on http://Amazon.com through an affiliate link - and that affiliate is a Minnesota resident - then, Amazon is obligated to pay the Minnesota state sales tax on that purchase because the agent which precipitated and caused the sale was connected to Minnesota - EVEN IF the buyer is a resident of a state that wouldn't normally be charged sales tax. I know it's confusing, and I have my opinions about such a law that I'll keep to myself - but there it is.
I am assuming Amazon banned Minnesota affiliates in the past because 1.) they didn't want to charge their customer's sales tax just because they came through a Minnesota resident's affiliate site, 2.) they didn't want to adjust their systems to account for this Minnesota law, 3.) they didn't want to absorb the cost of the sales tax themselves if they weren't going to pass it along to their customer, or 4.) for any combination of reasons above.
I am using Amazon as an example in the above statement. The truth is this law applies to all companies who utilize affiliates - it is not just Amazon. The good news is that Amazon has in fact allowed Minnesota affiliates back in. But the issue surrounding this Minnesota state law remains. I'm not far enough into WA yet to know what kind of obstacles I might run into - if any - which leads to my question, is their a bias against affiliates from Minnesota among companies that utilize affiliate marketing because of this law?
For way too much information re: the law I am referring to you can visit this site:
http://thompsonhall.com/minnesota-affiliate-marketing-laws-affiliate-nexus-tax/