Later today I will be updating the map again as New Mexico has formally joined the affiliate tax battleground. House Bill 50 has been introduced. House Bill 50 – New Mexico Internet Sales Tax . If this legislation passes and is put into effect, out of state merchants may be required to collect and remit sales tax on sales into New Mexico. This legislation appears to be more similar to the New York version. This proposed bill has a sales threshold of $10,000 in previous four quarters (from NM affiliates to NM residents) and the bill indicates that the nexus may be rebutted with proof of non-solicitation. Affiliates in New Mexico need to prepare by examining their merchants and identifying those relationships that may be at risk.
From House Bill 50 -
C. A person with a business with no physical presence in New Mexico is presumed to be engaging in business in New Mexico and has nexus with the state for purposes of due process and interstate commerce if:
(1) that person enters into an agreement with a resident of the state under which the resident, for a commission or other consideration, directly or indirectly refers potential customers, whether by link or an internet website or otherwise, to that person; and (2) the cumulative gross receipts from sales by that person to customers in the state who are referred to that person by all residents with an agreement described in this subsection are in excess of ten thousand dollars ($10,000) during the preceding twelve-month period ending on June 30 of any year.D. The presumption of nexus established in Subsection C of this section may be rebutted by proof that the resident made no solicitation in the state that would satisfy .180477.1
Affiliates should prepare their business model in case this law takes effect. Although it is still very early in the process, you need to prepare now to minimize the impact and damage. If you are interested in seeing what you can do to educate legislate about potential impact, reach out to your representatives. Contact information can be found at the New Mexico Legislature website listed below.
Affiliates please remember, while the law will have an impact, it does not mean the end of your affiliate marketing business, it just mean you will need to adjust. Learn from the experience of other affiliates in NY, NC and RI – prepare and adjust. New Mexico affiliate tax will mean your business will need to evolve; some merchant relationships may change but you will survive.
Merchants, please remember and learn from the mistakes made during the past two years. Keep the lines of communication open with your affiliates. If you will be taking action and terminating affiliates from NM please give affiliates adequate notice. We deserve professional respect.
I will continue to update as new information is available.
New Mexico Legislature- Search and monitor bills in New Mexico, identify legislators
{ 5 comments… read them below or add one }
Good, New Mexico should keep up with the times. It is not fair that online stores don’t collect the sales tax. I struggle everyday to earn a living and stores in other states have unfair advantage over me. Amazon is the worst – they give free shipping and no tax?
Hi Mellie. Note that the paragraph in section D doesn’t end there, and that number that looks like reference to some law isn’t actually part of the text. Subsection D reads:
“D. The presumption of nexus established in Subsection C of this section may be rebutted by proof that the resident made no solicitation in the state that would satisfy the nexus requirements of the United States constitution on behalf of the person presumed to be engaging in business in New Mexico.”
Stan, I actually agree with you that online retailers should be collecting sales tax, but the way the states are going about implementing it is *wrong*. Also, while I agree that not collecting sales tax does give an online retailer a very minor advantage over a local business, the far greater advantage lies in the increased selection that a company like Amazon has. You can’t stock nearly as much as it would take to compete with the selection they have. You have the advantage of immediacy though – I’ve bought more items from local stores than from online sources because I wanted/needed them *now*. Amazon can’t do that, and it far, far outweighs saving 18 cents in tax on my purchase.
Anyway, I’ve read this bill, and I’m currently looking for contact information for the House members that I need to contact about it. I’ve also Twittered it and am trying to raise awareness with other internet folks I know around here. Thanks for bringing it to our attention, Mellie.
The recap of my day at the Roundhouse – the state capital building here in New Mexico – has been posted: http://www.danielmclark.com/affiliate-marketing/fighting-affiliate-tax.html – It’s been tabled, and appears to be dead.
Instead of increasing tax revenue, perhaps New Mexico should trim its amazingly bloated bureaucracy and make it attractive for business to come to the state.
I am paying over 8% gross receipts tax in Santa Fe. I am now ordering as much as possible tax free over the internet.
I am not going to subsidize moronic state government if I can help it.
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