As my income reports show, most of my monthly income comes from the Amazon Associates program.
However, that changes in 10 days when Amazon shuts down their program ahead of Missouri’s new Nexus law.
Missouri is not the first state to pass these laws. Basically, these laws say that if a business has employees or pays commissions to affiliates in the state, then those corporations must start charging state sales tax on all of their orders in that state.
However, instead of increasing the amount of sales tax collected, all that happens is these companies cancel their associate’s accounts (and likely switch to ppc advertising to make up the difference).
The Dreaded Letter From Amazon
Here’s a partial copy of the letter I received:
“We are writing from the Amazon Associates Program to notify you that your Associates account will be closed and your Amazon Services LLC Associates Program Operating Agreement will be terminated effective August 27, 2013. This is a direct result of the unconstitutional Missouri state tax collection legislation passed by the state legislature and signed by Governor Nixon on July 5, 2013, with an effective date of August 28, 2013. As a result, we will no longer pay any advertising fees for customers referred to an Amazon Site after August 27 nor will we accept new applications for the Associates Program from Missouri residents.
Please be assured that all qualifying advertising fees earned prior to August 28, 2013 will be processed and paid in full in accordance with your regular advertising fee schedule. Based on your account closure date of August 27, 2013, any final payments will be paid by October 31, 2013.”
What Should Missourian’s Do?
To start off, I will never advocate that you avoid paying taxes. Additionally, I am not a tax expert. OR a legal expert.
But, thanks to my fellow internet marketers, I’ve picked up on several great ideas on how to continue making a living as an affiliate while residing in the beautiful state of Missouri.
Idea # 1 – Switch to Different Affiliate Programs
Probably the best-known alternative is Viglinks. Basically, Viglinks is a 3rd-party affiliate that let’s you get a cut of other affiliate programs — such as Amazon.
And, because they don’t actually sell any product, they are not not affected by the Nexus law.
Shareasale or Commission Junction are another couple of great 3rd-party affiliates that would be unaffected by the Nexus law since they are not retailers themselves.
The downside is that you will need to switch all of your links over to these alternate programs. The upside is that you can still get paid — and in some cases actually earn more by moving your links to Amazon’s competitors.
Idea # 2 – Start an LLC in a No-Tax State
This idea is great for a number of reasons. However, I don’t understand enough about LLC, Schedule-S corporations or taxes to figure out how to pull it off without making a mistake.
So I’ve decided to wait a few more months while I research this before incorporating or going with an LLC.
However, before January 1, I plan to investigate this more thoroughly and make up my mind.
Idea # 3 – Open a Post Office Box Outside of Missouri
Arkansas also has a Nexus law, as does Illinois so those two states are out. However, our remaining border states are allowed to participate in the Amazon Associates program. In fact, Amazon has a considerable employee force in Kansas, making it an ideal state to consider.
If you open a box with a UPS store, (Mailboxes.com) you can receive mail and have it forwarded to you.
The only thing to realize is that you will need to file a non-resident tax form for whatever state that you choose to setup your address in. And then you will need to file Form MO-CR and tell Missouri how much of your income tax was paid to Kansas so you don’t end up paying taxes twice.
Bottom Line is, Missouri Legislature Just Sent More Money Outside Of The State
I know from discussions with Representatives Eric Burlison and Mike Kelley that they are anxious to jumpstart more economic growth inside the state.
But, when they shut down small-time companies such as myself (that literally only offered an advertising service), it really shows that they haven’t thought their policies through very well.
Believe me, if it comes to the point that I have to move my operations to the Philippines in order to keep my business alive, I’ll do it. It’s time for both state and federal law-makers to wake up and realize just how easy it is to drive funds out-of-country.
Globalization is rapidly changing our world, and it is high time that our lawmakers got ahold of some current data on how their new laws will really effect the people.