Utah’s Nexus Bill: Fighting for Utah Affiliates and Mom Bloggers

Utah Rep Mike McKell Republican, House District 66, introduced HB0235, the Utah nexus bill and one that would really hurt Utah bloggers. There are similar bills in the Senate. All of the bills concern internet taxation and trying to force online retailer's hand by making them pay sales tax on anything sold to anyone who lives in Utah. Regardless if you like the term “mommy bloggers” (I don't) the idea is that this bill will hurt mostly women, because out of the thousands of bloggers in the state, the majority are women and they are moms.

The intention is to “level the playing field” between online and offline retailers. The problem is it won't work and in the process, yes, thousands of mommy bloggers will lose income and they will be mad. You know why? Because we're a pawn in this game. I know your intentions are to help businesses in our state. This isn't going to work though. I wish it would, but it won't.

Here's another take from a Utah blogger about why these bills are hurtful.

HERE'S HOW YOU LEVEL THE PLAYING FIELD

You want to know how to level the playing field between online and offline? It's not by charging sales tax. Online retailers win because of convenience and because they offer almost everything at the click of a mouse.  It's not over 4.7% or whatever your sales tax rate is. Physical retailers around this country are closing. It's not just a Utah issue and it's not because of a few dollars.

Consumers love being able to shop from home at any time of day from their computer or phone. You can find almost unlimited inventory, compare prices, pay and have items arrive at your house within a day or two. That's a lot easier and worth a few more dollars than driving to a store (pay gas, load up the kids, parking, etc), looking around to find what you're shopping for, then waiting in line to buy it.

If you truly want to level the playing field, then every physical store would also have an online version and it would be mobile-friendly so people can easily buy from you at any time. They'd get a Shopify store (yes, that's an affiliate link and I think they're one of the best ways to sell online) that starts at $9/month and offer in store pick up for people want to come in. They'd learn SEO (search engine optimization) so their items come up in search engines, and get good at shipping.

You don't level the playing field (which is actually impossible) by collecting sales tax. In fact, if I were the state of Utah, I'd much rather see incomes go up and collect on the income tax side.

UTAH NEXUS BILL: HOW AFFILIATE MARKETING WORKS AND WHY IT DOESN'T ESTABLISH PHYSICAL PRESENCE IN UTAH

Here's how affiliate marketing works. This website sells personal checks. There are many designs and prices to choose from. However, notice there is no shopping cart. My friend who makes a living with this site never collects money from her customers at all. In fact if you click on a check it takes you to an online retailer who actually sells the checks. Affiliate marketing is referring a sale from your website to theirs. They have an agreement with my friend and pays her a percent of all the orders she refers to them.

Most bloggers have affiliate relationships with dozens if not over a hundred different online retailers. These retailers a presence in different states. If you somehow twist things to say that if you're an affiliate then you have physical presence in the state, then bloggers have presence across the county and every state can use us to try and force online retailers to collect sales tax.

What happens instead is those retailers will refuse to do business with us again. Immediately. Within days we will get an email like this one which happened when Colorado passed a similar bill:

Valued Affiliate

We regret to inform you that in light of the recent passage of Colorado HB10-1193 Hayneedle has made the decision to terminate our relationship with affiliate partners based in Colorado. This means that effective Sunday, February 28th 2010, you will be removed from our affiliate program and will no longer be able to promote our products. All commissions earned up until February 28th will be paid in full.

We have appreciated your partnership and regret the turn of events that have forced us to take this action. Should this situation be resolved, we look forward to renewing our partnership with you in the future.

The GiftBaskets.com Affiliate Team

It will happen and it will hurt Utah bloggers. In some cases 100% of their income is from affiliate marketing. A blogger I talked to makes $40k a year and most of it probably from Amazon. She will be terminated from working with Amazon. Then what?? Is that a level playing field?

The law would essentially attempt to classify bloggers as more of an “employee” of the retailers we link to / advertise for – thus creating an official “nexus” (kinda like a homebase) for those retailers. That nexus gives the State of Utah the right to force that retailer to collect sales tax on purchases.

Here's some of us this law would hurt:

AFFILIATE MARKETING IS A MORE LEVEL PLAYING FIELD. THERE IS NO WAGE GAP AND MOMS CAN MAKE MONEY WHILE WORKING FROM HOME

I've been an affiliate for over 10 years. I am the cofounder of a conference that teaches bloggers how to use affiliate marketing to make money to support their family. Bloggers were already writing about what they do and their readers already want to know where they got those shoes their wearing or the exact sewing machine they use. Affiliate marketing just takes it a step further and incentivizes bloggers to link to those products (and make money if someone buys them).

Why do I teach affiliate marketing to bloggers? Because affiliate marketing is the best way I know to make money online – you don't need inventory, you don't have to ship products, and you don't have to be a certain color to advance, be educated or be a man. In Utah we have a pretty wide pay gap between men and women.

WHO DOES THIS AFFECT? THE % OF INCOME UTAH BLOGGERS MAKE FROM AFFILIATE MARKETING

I call Utah the mothership of blogging. We have so many bloggers and so many of us need to work to support our families. We have Dooce the original mom blogger, Crafting Chicks, Six Sisters' Stuff, Pink Peonies, Cara Loren and SO MANY VERY HIGH PROFILE BLOGS.

Many are looking for ways to be at home with young children AND earn an income. That's also why MLM is so big in Utah. We have a lot of moms with young children at home. We also have a very high level of entrepreneurship. These are avenues that are vital to us. I'm already getting KILLED on taxes because my husband and I are self-employed. If our income goes down because of this Utah's not going to get a lot of sales tax but they'll get less income tax.

Someone in my Utah Bloggers Facebook group asked what percent of income each person makes from affiliate marketing on their blog. It's way too long to list but here are some highlights:

I don't actually make any money from affiliate sales, my readers are just not shoppers. I might earn enough to buy one Blu-ray every year, however I am against this bill. I can see the harm that will come if this bill is passed to those who do make their livelihood through affiliate sales on their blogs and I see the harm that will come to the state because of it.

55% of my income is from affiliate marketing, all from Amazon. I have multiple blogs.

Right now I only make about 10% of my income from affiliate sales, but I'm just starting a new section of my blog where I'm hoping to make a lot more in affiliate sales. Now I don't know if I should bother.

50%. Most of my sales are outside Utah.

Probably around 20%… and mostly through Amazon. I only started last fall. Thanks for fighting for this, you are rad!

[Main site] plus three other sites. 50% income.

Currently fluctuates between 10-25% depending on the given month.

And I was just beginning to branch out from Amazon! (That is all Amazon) so it will suck if this passes just as I'm getting traction.

about 10% in my letter I mentioned that bloggers rely on a community and with this bill potentially putting so many of our fellow bloggers out of business we would all be affected.

HOW AMAZON REACTS TO NEXUS BILLS (WHY IT WON'T WORK)

Here's what a member of our group found researching the affects of this law:

28 States in which Amazon remits sales tax:
Arizona, California, Colorado, Connecticut, Florida, Georgia, Illinois, Indiana, Kansas, Kentucky, Maryland, Massachusetts, Michigan, Minnesota, Nevada, New Jersey, New York, North Carolina, North Dakota, Ohio, Pennsylvania, South Carolina, Tennessee, Texas, Virginia, Washington, West Virginia, and Wisconsin.

WHAT CAN WE DO TO STOP THIS BILL?

I hope you realize why we're fighting against a Utah nexus bill. I hope you'll contact your representatives and ask them to vote AGAINST it. The legislature is almost wrapped so this bill will pass or fail in the next few days.

Sign our petition.

Contact your Utah state representatives. Find your representatives, just put your address and zip code in on this website to get your district and reps. Click to get email and phone numbers. Let them know you're against this bill. Share your story.

We're running out of time. I woke up in distress this morning. This hit fast. I have to work on my business and this takes a ton of time. I'm not a trained lobbyist. In fact, I've only lobbied once in DC (in college) and it was terrifying. Jim Hanson was so rude to us – I'll never forget and it made me never want to try again. But I have to. This is too important not to give it all we can.

Right now, it's up to all of the Utah Affiliate Marketers to educate and stand up for our livelihood.