The following details the current “Amazon Affiliate Tax Issue” and what you can do as an affiliate to keep your business in business despite attempts from lawmakers to shut you down “inadvertently”.
Note: It is HIGHLY recommended that you get an attorney to set this up for you. While this set-up worked for me, it may not be the best solution for you. However, with the ideas presented here, it may give your attorney what they need in order to create the correct solution for you.
Update: A few members and one of my staff members informed me of an attorney bashing this solution. I was tempted to remove this video from public view and only have it available to my members, but as one member said, “Jerry, there is a reason for all of those lawyer jokes.” Good point. The video will remain online.
The following is my response:
1. First of all, his “solution” is that you physically move to another state. In this real estate market, do you think you can sell your house? And while you are waiting your income is either slashed in half or gone altogether. Your lifestyle will greatly suffer. And what happens when the state you move to passes this law, are you going to move again? Vegas is a great place to visit, but you couldn’t pay me to live there. That is not a solution.
2. Collecting these taxes is unconstitutional until the federal law is overturned. States are claiming that affiliates represent a “physical presence” in the state, and thereby, the merchant has to collect sales taxes. It is absurd to believe that an affiliate represents a “physical presence”. The courts will probably argue about this for years.
3. What would you rather have, paying a slightly higher tax rate on 100% of your income or the same tax rate you pay right now on 50% or 0% of your income? Yeah, I thought so. The bottom line here is getting you BACK in business quickly, not twiddling your thumbs and paying $20-30k to move to a state you don’t want to live in away from family and friends.
4. And as for traveling for meetings of shareholders and such, I have had a foreign company in another state for years and I’ve never had to personally show up to a shareholders meeting. They are all done through the mail and over the phone. Besides, if I did, I’m in Vegas twice a year. What affiliate DOESN’T want to go to Vegas at least once a year?
5. He then makes a pitch that you need a good internet attorney. Oh, he just happens to be one. Big surprise.
The solution I present isn’t my opinion, it is the solution my attorney and tax accountant came up with. I should also add my merchants, who terminated my accounts, were very helpful in providing advice to ensure their needs were met. I was in full communication with them through this process (you should too). As I state in the video, discuss this solution with your attorney. They know your business the best. But chances are, if they set you up correctly the first time, you already have a corporation setup in Nevada or Delaware for tax purposes. All you are doing is setting up a physical presence there remotely, and you are setting up a corporation in your home state to protect you from future IRS audits which are coming soon.
My solution has passed all the audits and I am confident that this is not unethical that I am posting this publicly. After all, all of my accounts are fully restored, which is exactly what you want.