Affiliate Tax Law Struck Down: 3 Problems With The Laws |  |
- Affiliate Tax Law Struck Down: 3 Problems With The Laws
- Christian Taylor of Payvment: Facebook Commerce Isn’t Your Father’s Ecommerce
- He Makes A Good Point: Danger, Danger!
- Everybody Claims to Represent Small Business This Election Year
| Affiliate Tax Law Struck Down: 3 Problems With The Laws Posted: 27 Apr 2012 12:00 PM PDT Nine months ago the Performance Marketing Association (PMA), filed a lawsuit against the State of Illinois over a newly-passed law requiring out-of-state retailers that sell to Illinois residents to collect and remit sales tax. The theory behind the law is that by advertising through affiliate marketers located within the state of Illinois, a retailer establishes a “nexus” similar to a physical presence in the state — even if it has no place of business or employees there. Immediately the law was described as devastating and doomed to lead to “no revenue, lost contracts… and lost jobs.” To avoid collecting the tax, and to call attention to the issue, shortly after the law’s passage multiple online retailers (including Amazon, Overstock, Zappos and others) terminated their relationships with Illionois-based affiliates. To stay in business, affiliate businesses like FatWallet, a 50-person small business, were forced to leave Illinois altogether.
Yesterday, however, something significant happened. On April 25, 2012 an Illinois Circuit Court, Judge Robert Lopez Cepero struck down the law. He ruled that the Illinois affiliate nexus tax law violates the Commerce Clause of the US Constitution, declaring “the activity described in the statute does not establish nexus.” He decided the suit in favor of the PMA, an industry group representing affiliate marketers, and for the benefit of thousands of affiliate marketers in Illinois and hundreds of thousands nationwide. The ongoing tax grab against online merchants who market through affiliates is a nationwide problem. (See our coverage of the many affiliate tax bills and laws). Yesterday’s Illinois court decision, coupled with a recent Colorado ruling) signifies that the issue will not be left up to individual states. Rather, it is a matter of interstate commerce and therefore of national concern. This is a polarizing issue, and it would be easy to look at it through one lens only. However, there are at least three inherent problems with state-specific affiliate nexus laws: 1. It isn’t all about Amazon – Yes, originally those who propose such bills hope to get additional tax revenue for their state, and with Amazon.com landing 25 cents of every online dollar spent in the U.S., it isn’t unusual for the legislators’ rhetoric to reference Amazon. However, it isn’t only Amazon.com being affected. Look at the bigger picture. There are 75 more cents in every dollar that go elsewhere. Such state laws affect all online merchants that market through affiliates. 2. There’s no “affiliation” as in an offline sense – In offline contexts “affiliate” often means “directly controlled” through ownership, ‘parent company’ relationships, or commercial and operating ties, etc). Online affiliates are very different. They are performance marketers who independently choose to invest their time, effort and money into promoting a merchant’s offers, being paid by the merchant only once performance (click, lead, call, or sale) happens. They aren’t “controlled” by the merchant. They shouldn’t be viewed as its representatives (which is where the idea of “nexus” stems from), but rather – as a type of an independent advertising channel. 3. The effect is reversed – States hope to collect additional taxes by passing the laws. What they do not take into account is the real-world effect. As in the Illinois situation above, in the real world what frequently happens is: (a) merchants who do not want to collect the tax (including the largest players) terminate relationships with affiliates who reside in the state, which, in its turn, leads to (b) real job losses [see chart here], and (c) a state’s loss of tax revenue due to less money coming in income taxes [see also this article and this post]. Legislators and decision-makers need to understand the above. Yet, presenting all sides is nearly impossible without pro-active lobbying by — and educational efforts from — affiliate marketers themselves. Affiliate marketers, so many of whom are small business owners and self-employed entrepreneurs, must speak out to make sure all sides are considered. Congratulations to the whole affiliate marketing industry on yesterday’s important achievement in Illinois. Let’s keep fighting, and educating! From Small Business Trends |
| Christian Taylor of Payvment: Facebook Commerce Isn’t Your Father’s Ecommerce Posted: 27 Apr 2012 08:30 AM PDT Social media has been a big asset to small business and as the years roll on, it’s continuing to evolve into an even bigger asset. For instance, did you know that you can leverage Facebook for ecommerce? Many are doing so with success and there are even tools to help you do so now. Christian Taylor, Founder of Payvment, joins Brent Leary to discuss one of those tools and shares the benefits, the challenges, and some statistical research on the subject. * * * * *
Christian Taylor: Before I started Payvment I used to have a company called X Creative. X Creative was really tasked with building a lot of the social presence for large brands. Many of our customers were companies like Walt Disney, Lions Gate, and a lot of entertainment groups. In the case of Disney, if you think about it, merchandising was just as huge has making movies, so we saw a need really quickly. There needed to be a way to essentially shop if you just discovered some sort of product on Facebook and wanted to purchase that. We saw the need in that and really got excited about the possibilities of what it could mean, especially for small businesses. Small Business Trends: What are some of the unique challenges when it comes to doing ecommerce on Facebook from a small business perspective? Christian Taylor: Small businesses are really doing well on Facebook with ecommerce. If you think about it, before Facebook and really before Payvment, if you wanted to start a business you would get a web designer, build a website, add some ecommerce solutions to it, and probably had to buy Google ads, or a bunch of other advertisement to drive traffic to your new store. Payvment is absolutely free for brands or sellers to essentially add ecommerce to that Facebook page, and do what used to cost thousands of thousands of dollars to do. Small Business Trends: You recently put out a study on how small businesses are getting serious about doing ecommerce on Facebook. 61% cite the ability to promote products via social marketing as a driver for Facebook commerce. Is there anything in this study that surprised you? Christian Taylor: I think the numbers that surprised me the most were finding out how many are strictly using Facebook as their sole lead commerce channel. I think it was 37% of all of the ecommerce stores that we surveyed said their sole channel for ecommerce is just on Facebook. Small Business Trends: What are some of the misconceptions or overlooked areas small businesses go into with Facebook? Christian Taylor: I think ecommerce on Facebook is a completely different animal than ecommerce anywhere else. It is a social network, it is about being social. I think at first that was the big hurdle early on. The easiest way to put this in perspective is, let's say you just walked into a brick-and-mortar store, and the store owner has his back to you the whole time you were there. Obviously you’d get upset and probably walk out of the store and go somewhere else. That is really the way that these sellers need to think about ecommerce on Facebook. It is not just throwing a store up on Facebook; it is not just throwing products at people and crossing your arms. The people having great success are the ones who are finding people that are passionate about their products, and opening up a dialogue. What Payvment has done over the last two years is really help to build tools to help our sellers to be able to do that easier. Small Business Trends: Are you surprised at the adoption of Facebook as an ecommerce platform? Christian Taylor: I am not surprised by it. We built a business on it because we knew the power of it, and we knew it was going to be huge. The way that we looked at it, it was going to be a different shopping experience than anywhere else. What social commerce is, is really just discovering products through a whole bunch of different methods. It is really not about, "I am going to Facebook to go buy a camera." I am going to Facebook, and while I did not know about this cause, I want to buy this shirt to raise money for breast cancer awareness. It is those kind of things that really make shopping on Facebook different, and while we knew it was going to explode, essentially there has always been discovery in every aspect of Ecommerce even before there was such a word as social commerce or even Facebook. Small Business Trends: What are the top two or three things a small business should know when it comes to getting started with Facebook commerce? Christian Taylor: Well the reasons why we have grown essentially to power nearly all of the shopping on Facebook is mainly because we always looked at it as a need to help the seller. We are not just giving you ecommerce software to add to your Facebook page and just say, "Well good luck with that." It is providing tools that help sellers become successful at social commerce. We recently launched a technology we called Social IQ. When our sellers go into their Payvment Dashboard, Social IQ looks at their recent history of what is going on in Facebook around their products and how people are interacting with them, and gives them some daily suggestions on things to do in helping them to increase their sales and increase their fans. We are going to continue to develop products to help people – no matter what level they are at. You can be a stay at home mom with a business, or a large corporation wanting to leverage Facebook to launch a product. We want to make it so that these brands can really learn and have home run success right off the bat. Small Business Trends: Where can people go to learn more about getting up to speed by using Facebook commerce? Christian Taylor: Just go to Payvment.com. It's free to launch a store on Facebook and it takes about 15 minutes. On another social commerce note, read why Guy Kawasaki wonders why Amazon hasn’t tried to buy Pinterest as of yet on Brent’s blog. This interview is part of our One on One series of conversations with some of the most thought-provoking entrepreneurs, authors and experts in business today. This interview has been edited for publication. To hear audio of the full interview, click the right arrow on the gray player below. You can also see more interviews in our interview series.
From Small Business Trends This posting includes an audio/video/photo media file: Download Now |
| He Makes A Good Point: Danger, Danger! Posted: 27 Apr 2012 05:30 AM PDT
As a kid growing up I watched a lot of television. Cartoons, sitcoms, even the late night talk shows (don’t tell my mom!) One of my absolute favorite shows was Lost In Space. Looking at it now, sure, it’s cheesy and all, but that robot is still pretty cool:
It makes me smile just writing that. So as much as I’d like to say that this cartoon is funny or insightful or relevant, mostly it was an excuse to draw one of my favorite robots.
Awesome. From Small Business Trends |
| Everybody Claims to Represent Small Business This Election Year Posted: 27 Apr 2012 02:30 AM PDT Hey, we know the small business community is diverse, that small business owners all hold very different viewpoints and come from very different perspectives. That’s why it’s amazing how many people try to speak for us come election time. Below are just some of the examples. But just as small business owners do in our own companies, we’ll think for ourselves, thank you very much! What do you think? Campaign SeasonHas the Small Business Administration helped you? The SBA is putting together a video contest for National Small Business Week May 20 through May 26. The video is designed to show the ingenuity of American small business (as well as highlight the help the current administration has offered small business.) The White House Blog What the other candidate did for one small business. Before the current U.S. President takes too much credit, just look what his Republican opponent Mitt Romney did for one small town business when his inadvertent diss brought customers out in support. Huffington Post Don’t forget, the House of Representatives loves us too. So much so, in fact that the current political majority passed a $46 billion small business tax cut. The bill is intended to help entrepreneurs deduct 20 percent of their income. (Of course, opponents say it’s only for rich people.) ABC News Energy PolicySmall business’s opinion on renewable energy and clean air standards? This survey claims to speak for U.S. small business generally when it comes to opinions on clean energy, including more government spending. Do they speak for you too? Small Business Majority Heath Care DebateSmall business owners against health care? If your political concerns as a small business owners are pretty much confined to the federal Health Insurance Tax scheduled to take effect by 2014 (and specifically on how to stop it), there’s even a group just for you. Stop the Hit Some options for replacing the current health care law. But don’t get the idea small business groups want to simply do away with the idea of health care reform. Some just want to do it differently. Consider this list of alternatives from one group in particular. NFIB Or is health care reform a good idea? Another voice insists far from causing the disaster some claim, the Affordable Care Act will actually level the playing field for small business owners who now pay more to insure their employees. One caveat. He works for the government. Other VoicesThe NASE has a boat load of issues. And they’re issues they believe every small business owner should be concerned about…if, of course, you happen to be a self-employed business of one. The self-employed make up a large swath of the U.S. economy these days, and NASE wants you to know they’ve got your back. National Association for the Self-Employed Want someone to tell you how to vote? A national small business advocacy group releases a list of pro-small business candidates each election cycle and launches ad campaigns to support them. Above is a link to a PowerPoint telling a bit more about who the group is and what they’re about. Trust in Small Business Giving others a voice. Here’s a video created recently by another group of small business leaders seeking to give their members a voice. With various groups claiming to speak for small businesses this election year, the number of messages can be overwhelming. Asian American Small Business PAC From Small Business Trends |
Small Business Trends: Before we get into Facebook commerce, can you tell us a little bit about your back ground?
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