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Question regarding state tax nexus laws

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Hi, I do online affiliate marketing and live in California, which has a sales tax nexus law.  As a consequence, the affiliate provider “platform” doesn’t give me a commission for sales made to customers in California.  I am losing a lot of money.  My affiliate provider said if I only change my address in my profile, I could start collecting California commissions; I was thinking of putting down a forwarding address in Oregon (there are plenty of providers online) as a my residence (Oregon also doesn’t have a sales tax nexus law).  Is this illegal?  I intend to fully pay California sales tax on all commissions that I receive, but it’s first the question of actually getting those commissions.  Any help would be appreciated.  Thanks!

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rated:
Interesting, I wonder if they can avoid click through nexus by just deciding not to pay.

Are you operating through an entity?

What affiliate network is this? Or are you working directly with the merchant? Do they not allow it for only certain merchants?

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mariavcmartin said:   Hi, I do online affiliate marketing and live in California, which has a sales tax nexus law.  As a consequence, the affiliate provider “platform” doesn’t give me a commission for sales made to customers in California.  I am losing a lot of money.  My affiliate provider said if I only change my address in my profile, I could start collecting California commissions; I was thinking of putting down a forwarding address in Oregon (there are plenty of providers online) as a my residence (Oregon also doesn’t have a sales tax nexus law).  Is this illegal?  I intend to fully pay California sales tax on all commissions that I receive, but it’s first the question of actually getting those commissions.  Any help would be appreciated.  Thanks!
I won't chime in on whether it's legal or not, but it's almost certainly against your agreement with the provider. They are doing this to prevent nexus in California, so you are putting them at risk of a liability by potentially creating a nexus there and opening them (and their customers) up to significant liability.

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Hmm...do they use that location to mail you any material such as a 1099-K?
If not, then well....if you do it, we didn't tell you to do it here as that is illegal (And I live in CA)

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Another option is just move out of California. I left in 1992 and never looked back.

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mariavcmartin said:   I was thinking of putting down a forwarding address in Oregon (there are plenty of providers online) as a my residence (Oregon also doesn’t have a sales tax nexus law).  Is this illegal?
Can't comment on the legality part (since IANAL); however, I suspect you'd have to pay INCOME TAX in Oregon if you do that.  Am not familiar w/ CA tax laws, but in other jurisdictions I've lived in, out of state income taxes reduced in state tax liability by the amount paid out of state.  (Example: If in state income taxes were $1,000 and $200 was paid as out of state income taxes, the amount owed in state dropped down to $800).

  

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mariavcmartin said:   I intend to fully pay California sales tax on all commissions that I receive,
 

  
You're going to pay the sales tax for someone else's purchases? That makes no sense.

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mariavcmartin said:   Hi, I do online affiliate marketing and live in California, which has a sales tax nexus law.  As a consequence, the affiliate provider “platform” doesn’t give me a commission for sales made to customers in California.  I am losing a lot of money.  My affiliate provider said if I only change my address in my profile, I could start collecting California commissions; I was thinking of putting down a forwarding address in Oregon (there are plenty of providers online) as a my residence (Oregon also doesn’t have a sales tax nexus law).  Is this illegal?  I intend to fully pay California sales tax on all commissions that I receive, but it’s first the question of actually getting those commissions.  Any help would be appreciated.  Thanks!
  It sounds like you existing practice is illegal if you are arranging sales in California and California sales tax is not being collected.  It doesn't matter whether the affiliate cheats you out of your commissions or not, if you're arranging sales for them you have created nexus for California sales tax.
No SALES tax is due California on your commissions.  Rather, your commissions would be included in your income tax return for California.

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jhburgess said:   
mariavcmartin said:   Hi, I do online affiliate marketing and live in California, which has a sales tax nexus law.  As a consequence, the affiliate provider “platform” doesn’t give me a commission for sales made to customers in California.  I am losing a lot of money.  My affiliate provider said if I only change my address in my profile, I could start collecting California commissions; I was thinking of putting down a forwarding address in Oregon (there are plenty of providers online) as a my residence (Oregon also doesn’t have a sales tax nexus law).  Is this illegal?  I intend to fully pay California sales tax on all commissions that I receive, but it’s first the question of actually getting those commissions.  Any help would be appreciated.  Thanks!
  It sounds like you existing practice is illegal if you are arranging sales in California and California sales tax is not being collected.  It doesn't matter whether the affiliate cheats you out of your commissions or not, if you're arranging sales for them you have created nexus for California sales tax.
No SALES tax is due California on your commissions.  Rather, your commissions would be included in your income tax return for California.

  What? Why is OP's current practice illegal? Should OP be collecting sales tax from the merchant? Are affiliate revenues subject to sales tax in California?

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marginoferror said:   
jhburgess said:   
mariavcmartin said:   Hi, I do online affiliate marketing and live in California, which has a sales tax nexus law.  As a consequence, the affiliate provider “platform” doesn’t give me a commission for sales made to customers in California.  I am losing a lot of money.  My affiliate provider said if I only change my address in my profile, I could start collecting California commissions; I was thinking of putting down a forwarding address in Oregon (there are plenty of providers online) as a my residence (Oregon also doesn’t have a sales tax nexus law).  Is this illegal?  I intend to fully pay California sales tax on all commissions that I receive, but it’s first the question of actually getting those commissions.  Any help would be appreciated.  Thanks!
  It sounds like you existing practice is illegal if you are arranging sales in California and California sales tax is not being collected.  It doesn't matter whether the affiliate cheats you out of your commissions or not, if you're arranging sales for them you have created nexus for California sales tax.
No SALES tax is due California on your commissions.  Rather, your commissions would be included in your income tax return for California.

  What? Why is OP's current practice illegal? Should OP be collecting sales tax from the merchant? Are affiliate revenues subject to sales tax in California?

  It isn't. No. No. What jhburgess is saying (I think) is that if OP is creating a nexus for the merchant in California, OP is obligating the merchant to collect sales tax from end-purchasers. If the merchant doesn't do so, that would be illegal.

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1. I don't see how the provider can get away with not paying you out on CA purchases, as sales tax is collected separately and does not impact their net revenue on any particular sale to a CA address.
2. Don't partake in their amateur-night tax evasion scheme. Not only do they have no idea what they are doing, but they are liars (see #1, above), and will roll over on you in one second.

IANYL

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Crazytree said:   1. I don't see how the provider can get away with not paying you out on CA purchases, as sales tax is collected separately and does not impact their net revenue on any particular sale to a CA address.
2. Don't partake in their amateur-night tax evasion scheme. Not only do they have no idea what they are doing, but they are liars (see #1, above), and will roll over on you in one second.

IANYL

  I don't know the specifics of California's rules, but the presence of an affiliate in California who promotes another website may subject the ultimate company (the company being promoted) to sales tax collection obligations in California, without any other connection there. It's an attempted workaround to a poorly decided Supreme Court case that has resulted in many unintended consequences. So if a California customer buys from a merchant, and that merchant has an affiliate in California, they could be required to collect CA sales tax and remit to California. I would imagine, though I'm not too familiar with affiliate networks and practices, that a merchant can tell the affiliate network that they do not want any affiliates in particular states. The affiliate network, presumably, believes that they have no exposure as long as they're basing the affiliate's location on the mailing address.

That said, it would slightly surprise me if they could get around attributional nexus by simply not paying out, as opposed to severing the relationship, but again, haven't specifically looked at California.

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It's all due to a law passed because of Amazon. Other companies get caught up in it. Amazon gave in and opened a WHS in California, but that doesn't mean the law was repealed. If you have affiliates selling your stuff in California, then you owe Taxes to all sales sent to CA.

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BostonOne said:   
marginoferror said:   
jhburgess said:   
mariavcmartin said:   Hi, I do online affiliate marketing and live in California, which has a sales tax nexus law.  As a consequence, the affiliate provider “platform” doesn’t give me a commission for sales made to customers in California.  I am losing a lot of money.  My affiliate provider said if I only change my address in my profile, I could start collecting California commissions; I was thinking of putting down a forwarding address in Oregon (there are plenty of providers online) as a my residence (Oregon also doesn’t have a sales tax nexus law).  Is this illegal?  I intend to fully pay California sales tax on all commissions that I receive, but it’s first the question of actually getting those commissions.  Any help would be appreciated.  Thanks!
  It sounds like you existing practice is illegal if you are arranging sales in California and California sales tax is not being collected.  It doesn't matter whether the affiliate cheats you out of your commissions or not, if you're arranging sales for them you have created nexus for California sales tax.
No SALES tax is due California on your commissions.  Rather, your commissions would be included in your income tax return for California.

  What? Why is OP's current practice illegal? Should OP be collecting sales tax from the merchant? Are affiliate revenues subject to sales tax in California?

  It isn't. No. No. What jhburgess is saying (I think) is that if OP is creating a nexus for the merchant in California, OP is obligating the merchant to collect sales tax from end-purchasers. If the merchant doesn't do so, that would be illegal.

Thanks - you expressed it better than I did.  

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forbin4040 said:   It's all due to a law passed because of Amazon.  Other companies get caught up in it. Amazon gave in and opened a WHS in California, but that doesn't mean the law was repealed. If you have affiliates selling your stuff in California, then you owe Taxes to all sales sent to CA.
  Amazon fought it strongly, but they just kept losing. Now, they not only gave in, they're now one of the biggest players supporting these types of laws. They changed their business model and they were lucky enough to develop a dominate market share through this tactic before the "loophole" was closed.

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marginoferror said:   
forbin4040 said:   It's all due to a law passed because of Amazon.  Other companies get caught up in it. Amazon gave in and opened a WHS in California, but that doesn't mean the law was repealed. If you have affiliates selling your stuff in California, then you owe Taxes to all sales sent to CA.
  Amazon fought it strongly, but they just kept losing. Now, they not only gave in, they're now one of the biggest players supporting these types of laws. They changed their business model and they were lucky enough to develop a dominate market share through this tactic before the "loophole" was closed.

I thought this was a silly move when Illinois (I think they were first) passed a law saying that affiliates created nexus in a blatant attempt to force Amazon and others to collect sales tax. Other states soon followed and others merely threatened to in order to cut deals with Amazon to collect tax. That said, internet retailers don't need to be protected anymore and online purchases should be treated equally with tax being collected for the state where the goods are being delivered (I know the FW crowd will hate me for that belief). It would make more sense for Congress to take care of this rather than have a patchwork of state laws, but that is unlikely to happen.

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Didn't FatWallet move to Wisconsin from Illinois due to the nexus laws?

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