It first started in New York and now it’s slowly gaining momentum in other States…what are we talking about? Internet Tax Laws also know as Nexus Tax laws.

First what is Nexus? Means that a business has a sufficient connection with the taxing State to allow the State to have taxing authority. More at Answers.com

Make no mistake about it this a very BIG DEAL, especially for affiliate marketers!

If you have an affiliate business in one of the State’s that have passed such laws then you have already felt the pinch…

Case in point-lets touch on AMAZON’s associate program. There’s a lot of people out there making a very good living off of promoting and selling Amazon’s products. But if you live in a State that has recently passed a Nexus law or is in the process of doing so, then your going to be out of luck! You see Amazon wants nothing to do with paying taxes for affiliates, even though it really would not be that difficult for them. They feel that having affiliates does not mean that they have a physical presence within that State. Here lies the problem is!  The States disagree, and believe that if your affiliates are conducting business on your companies behalf then you certainly do have a presence!

You see, most States now are struggling with a drop in Federal funding and they need to now get creative. Enter the Politician with a bright idea that they can gain extra revenue from this and it becomes a snowball effect with the Affiliate caught squarely in the crossfire.

What States currently have Nexus Laws on the books?

New York, Connecticut, Maryland, Hawaii, Missouri, Rhode Island, North Carolina and Minnesota.

With that being said lets get back to Amazon…One of the most recent States to ratify was North Carolina. Once that happened, Amazon sent out letters to all affiliates in that State canceling their associate accounts. No More NC affiliates! In one fell swoop thousands of people lost important revenue and the State with its hands out ready to collect, was out as well!

Amazon has taken a hard line here so if your State is in the process of drafting such legislation then you need to be prepared.

So what can you do to protect your Online Business? First you’ll need to set up a company within one of the States that is least likely to pass any Nexus Laws.

Two States you can look at are Delaware and Nevada. Ever notice the mailing address on your credit card statement?  Most companies are incorporated Delaware because there’s no taxes!

Filling out paper work is fairly easy. These days it can be completed long distance… online or by mail. Next you’ll need to have a physical mailing address in that State, this is key.  Set up a mail pickup service and you now have a presence within that State.

Simply reapply to the Amazon Associate Program…once they verify mailing your back in business. Amazon does not care if you actually live in that State!

If you want to stay current on whats happening then visit Comission Junction under News, Internet Tax. They provide the most current and update information out there.  By the way CJ has no plans to cancel its Affiliate programs as rumored several months ago.