Disclaimer: I can not be held liable for any action or inaction that comes from the information shared in this blog post. Talk to your accountant and or lawyer before doing anything.

In a down economy states are always looking to find ways to increase tax revenues and deal with budget shortfalls. Sadly, this usually comes in the form of new taxes from state legislatures / governors and the new tax most threatening to our industry is the affiliate nexus tax.

What Is The Affiliate Nexus Tax?

States argue that even though an online retailer (Amazon for example) doesn’t have a physical presence in their state they claim having an affiliate in the state represents a physical presence for the business because they are helping to sell the online retailers goods in their state (silly huh?). So once there is a physical presence established in the state the state then says they can collect sales tax from these merchants because of the affiliate relationship.

Primary Problem With The Affiliate Nexus Tax Law: It Doesn’t Work

The politicians involved in signing these laws into are either ill informed or just plain stupid because the businesses helping to promote and push these laws into existence aren’t Mom and Pop shops that are “hurting” as the bill proponents would have you believe, but rather huge national retail outlets like Walmart. So as Amazon has proven time and time again, whenever the affiliate nexus tax law passes in a state they simply shut down their affiliate program and then the state not only isn’t able to claim sales tax revenue they thought they could, they also end up hurting thousands of people that rely on affiliate program income to make a living. Now I don’t want to get into any political debate so let me just share how others have gotten out of this mess.

How To Set Up A Business In A Neighboring State:

Disclaimer: Again I repeat – I am neither an accountant or a lawyer, the advice I’m about to share is based on what I’ve heard other affiliates do when the nexus law passes in their state. Consult with your accountant and/or a lawyer before doing anything outlined here.

Step 1: Create an out of state LLC or other business entity
Step 2: Use a registered agent service to forward your mail
Step 3: Open a bank account in the new businesses name
Step 4: Voila, you can now reapply to various affiliate programs that were shut down because of the affiliate tax nexus law under your new business
Update: Good discussions in the comments as to whether or not this method is allowed – just another reason for you to ask your lawyer and/or accountant for advice for your state: See here.

Overall Advice:

As with most things in life when someone throws up a roadblock the easiest thing to do is not look for a way to get around it. But, if you’re willing to put in a little work and hustle to make your business work even in the face of various obstacles thrown at you I’d suggest the alternative of simply moving onto other affiliate programs and other forms of website monetization. Remember there are thousands of ways to make money online you just need to pick one that works for you.

Need To Sell Your Amazon Website Now?

If Amazon has shut down their affiliate program in your state and you’re not interested in pursuing the above please contact me if you have Amazon focused websites you’re looking to sell now. Have a website you want to sell? Contact me here