Monday, May 20, 2024
Lawyers Run The WorldSupreme Court over Affiliate Tax

Supreme Court over Affiliate Tax

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The Performance Marketing Association is pleased to announce that today it filed an amicus curiae brief (friend of the court) with the US Supreme Court, supporting petitions filed by Amazon and New York, requesting the Court hear their challenges of the New York Affiliate Nexus Tax law.

Amazon and Overstock make the case that the New York law is unconstitutional, and that the state overstepped its jurisdiction by attempting to force retailers to collect state sales tax. The PMA brief provides a real-world context to the case, explaining the devastation to 15,000 affiliate marketers in the state, when 1,000 out-of-state retailers terminated their advertising agreements with New York-based affiliate marketers. Since New York passed its law in 2008, twelve other states have followed suit, resulting in 90,000 affiliate marketers having their incomes devastated.

The US Constitution restricts a state from imposing a tax collection burden on an out-of-state company, unless that company has a physical presence, or ‘nexus,’ in the state. The New York law, and the basic substance of all affiliate nexus tax laws, claims that affiliate marketing is equivalent to a sales force or an agent of a company, and thereby meets the nexus standard. The PMA’s amicus brief details typical activities of affiliate marketers, and clearly refutes any possibility that affiliate marketers practice something other than passive and anonymous advertising.

The US Supreme Court typically receives 10,000 petitions a year, but only hears about 100 cases. We hope to hear whether or not they will accept this case by late October.

We are very proud of this document, and the extensive effort that went into its development. We would particularly like to thank John Cooney, Esq., of Venable, the attorney who crafted this clear and straightforward text. He does a great job of explaining what we do in performance marketing, in a way that is easy to understand and points out the flaws in the New York law. You can read the brief here.

The PMA is battling this devastating law on multiple fronts; we are awaiting an judgment on our suit against the State of Illinois, being considered by the Illinois Supreme Court; and we are hoping the Main Street Fairness Act, federal legislation that would make an affiliate nexus tax irrelevant, gains momentum in the US House of Representatives, after it passed the US Senate earlier in the year.

Thank you to our members for your continued support in our efforts to advocate on behalf of the performance marketing industry.

Rebecca Madigan
Rebecca Madigan
Rebecca is the Executive Director of the Performance Marketing Association, the industry's only trade-association dedicated to performance and affiliate marketing, founded by industry leaders to connect, inform and advocate on behalf of this industry.

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