E-Fairness is killing Arkansas Business...

Recently the legislature passed SB738, the "E-fairness" bill. This bill would require "Internet retailers to collect sales tax if they accept referrals from affiliate web sites and do more than $10,000 a year in sales in Arkansas."

To get an idea of what an affiliate program is here is a link to Overstocks Affiliate program:

http://www.overstock.com/20789/static.html

Basically what the affiliate program does is allow everyday hard-working Arkansans to make a few extra dollars or in some cases a living by putting a link or a banner on their website. Every time someone clicks on that link/banner and then buys a product, the person gets a commission from it.

Here is a letter I received from one of my constituents:

To: Meeks, David
Subject: Act 1001 has already negatively affected my business

Dear Mr. Meeks,

First, I want to thank you for voting against SB738 regarding the sales tax
and online merchants.
I am an affiliate marketer and I made my concerns known when the bill was
still in the House committee (taxation).

The bill passed and I was immediately terminated by the online merchants who
follow this silly tax nexus bill around the country.

Every few hours I get another termination letter regretfully informing me
that I can no longer be a part of their advertising program because I live
in Arkansas. Each letter says that if I can demonstrate that I have moved
my business out of the state of Arkansas before the effective date of the
bill, I can reapply.

Here's a partial list - I say partial because I figure there are a few more
in my mailbox by now.

Overstock - I made most of my income last year from this merchant
Amazon
Scrubs and Beyond - this relationship was the mainstay of 3 of my web sites.
CSN stores - more than 200 stores networked together - I just lost all of
them
ThinkGeek
Nurses Station - another important one to my business
Dr. Leonard's / Carol Wright mail order catalogs.

There are dozens of others I expect because they have terminated ther web
site link affiliates in every other state that passed these laws.

Is there any chance of repeal when your fellow representatives see that it
isn't going to add to the tax revenues and is hurting Arkansas businesses?

I am already trying to figure out where I should relocate.

So the effect this law is having is actually taking money out of the pockets of hard-working Arkansans and as is the case of the person above, it is causing them to move their business out of Arkansas.

And here is the kicker...From the way I understand the law to be written, if the person above moves out of the state and I as an Arkansan order from that person's site, I pay no state sales tax on the item.

I say let's repeal this bad law, and take a different approach. Let's give those that have a physical store here a break via the corporate income tax or find some way to do away with them having to charge state sales tax on items they ship directly to the customer on items purchased via the internet.

UPDATE:

Here is a good talking points bulletin from Overstock about the effects of this law: http://www.performancemarketingassociation.com/overstock/

Have a similar story? Please feel free to send me an email at david.meeks@arkansashouse.org