Many legislators view online shopping transactions as potential sources of revenue. Since a state can only compel sellers with a physical presence, or nexus, within their borders to collect sales tax, they have no authority to require this of online and catalog retailers located outside their state. While most online retailers serve a national market, many have nexus in only one or two states.

Since 2008, legislation has been proposed in nearly two dozen states and passed in three to compel out-of-state online retailers to collect sales taxes from their residents. In “affiliate tax states” the law defines affiliate marketers as establishing nexus for out-of-state retailers.

Many online retailers have responded by dissolving their affiliate relationships within those states. The result has been little new sales tax growth. Because affiliates are job creators, the state also loses income tax revenues as affiliate marketing income and jobs are lost and affiliates relocate to more tax-friendly havens.

As a matter of self-preservation, affiliates have felt compelled to fight such affiliate tax proposals. Many have asked how they can better address the issues and influence the debate. Here are some suggestions for maximizing your impact:

1. Do your homework first – go online and read the proposed law (called a “bill”) thoroughly.
2. Evaluate how it personally impacts you and your company.
3. Track the bill’s status regularly. Note all legislators on the committee where the bill is assigned — they have the power to amend or even kill it.
4. Carefully plan your response – practice until you can express it in less than one minute. Stress that affiliate marketing creates jobs. Tell how the affiliate tax will hurt you (and your employees, if applicable). Point out how your business will suffer if this bill passes.
5. Summarize the above details into a one page fact sheet (bullet points are good). Include bill number, title, and your source references. Bring multiple copies to any meeting.
6. When contacting legislators, be brief, honest, and to the point. Personal meetings and phone calls are far better than impersonal emails. Be polite and respectful. Don’t argue or burn bridges. Offer to help by providing personal testimonials and data from other states. The Performance Marketing Association (PMA) and the major affiliate networks have resources that you can use.
7. Encourage co-workers and employees to contact their legislators (their jobs could be at stake). If you have employees, personally contact each of their legislators as well.
8. Don’t forget to talk with legislative staff members (they’re very influential).
9. If possible, form an advocacy group with a positive name (Affiliates Create Jobs, for example). Contact legislators and local and state news media outlets on behalf of your group.

After your meeting, be sure to promptly provide any promised materials. Also, sending a hand-written thank-you note can help build valuable, long-term relationships.

Affiliates are innovative and need to be part of this debate. As entrepreneurs, some should probably even run for office!

Mike is “Chief Executive Shopper” at Shopping-Bargains.com, a Mississippi-based coupon and deal site.

Download the entire FeedFront issue 14 here – http://www.scribd.com/doc/52425616/FeedFront-Magazine-Issue-14>
FeedFront issue 14 articles can be found here as well: http://feedfront.com/archives/article00date/2011/04>