The Direct Marketing Association (DMA) has been closely monitoring the developments of the New York Internet Sales Tax issue. Yesterday the DMA’s Tax Counsel, George Isaacson, issued a brief analysis of the June 30, 2008 Technical Services Bulletin (TSB) related to the Internet/Affiliate Nexus Law.

The TSB, titled “Additional Information on How Sellers May Rebut the New Presumption Applicable to the Definition of Sales Tax Vendor as Described in TSB-M-08(3)S,” imposes additional requirements that a remote seller must satisfy to rebut the presumption of “vendor” status, according to Isaacson.

The original TSB was issued on May 8, just about a month prior to the new regulations going into effect on Jun 1, 2008.

It is not longer sufficient for merchants and networks simply changes the terminology of their contracts with affiliates to include explicate language barring them from activities other than direct linking to websites, according to Isaacson’s analysis. Now the new TSB says that “each resident representative must submit to the seller, on an annual basis, a signed certification stating that the resident has not engaged in any prohibited solicitation activities in New York State, as described above, at any time during the previous year.”

These activities are listed in the TBS as “distributing flyers, coupons, newsletters, and other printed materials or electronic equivalents; verbal solicitation (e.g., in-personal referrals); initiating telephone calls and sending emails.”

Isaacson also questions the enforcement of this and wondered what the consequences will be for affiliates that do not provide the newly required documents or to the merchants and networks that fail to obtain them.

Stay tuned.

There are ongoing discussions at:
ABestWeb.com
5 Star Affiliate Programs