Alternatives for Nexus Tax Victims (Amazon Associates)

Did you lose your Amazon Associate Account? Me, too. I'm a Californian, and the Amazon Associates program got terminated at the end of June 2011.

We're stuck. We've got state senators making these decisions without really understanding e-commerce or the internet. They claim they're protecting state businesses by forcing online merchants to charge sales tax.

But federal law says states can ONLY levy sales tax on companies with a "substantial physical nexus" (you know, like, a building!) in their state. They can't levy sales tax on companies that aren't in the state. Somehow, states have managed to define my posterior connected to my sofa as a "substantial physical nexus." Yes, it's a wide posterior, but really, it's not the size of a Wal-Mart.

Alas, that posterior is the one and only pretext on which California can ask Amazon to cough up $83 million dollars in sales tax. No wonder Amazon has decided it no longer wants to be associated with my posterior. Terminated!

What now?

Google Adsense, Hubpage Ads, Chitika, Infolinks, Meebo: advertising is not treated the same way as sales, so if you can post ads, you can collect income. Unfortunately, there are some topics for which "targeted" ads just aren't. I have a terrible time with my mythology blog; Adsense keeps throwing Jehovah's Witnesses and psychics banner ads at it which my readers will find tacky. So I really hate having to go the advertising route.

There's one old-fashioned alternative that might work. If you've got a niche, it may be time to start hunting for topic-relevant websites who will pay you for a link. Think of the IWearYourShirt guys. They (a) offered to advertise other people's stuff and (b) provided good enough content to draw traffic so many people saw the advertising. Not easy, but a possibility. Of course, the risk is that you'll come off as an annoying link spammer. You'll have to offer real content, real traffic, and earn your potential ad partner's respect.

Some affiliate programs haven't terminated their California associates.

Allposters has never paid me much, but it hasn't sent me a termination email, either.

Barnes & Noble has been collecting sales tax, I've heard, so you could affiliate with them.

Zazzle -- good ol' Zazzle -- has its referral program in good working order.

Now, will Hubpages allow these affiliate programs? If Hubpages won't, this is still the best solution for your own blogs or websites off HP.

Frustratingly, the California Nexus Tax mess happened just as I was trying to shift eggs into more different baskets. I've had to fall back on Squidoo as a safety net.

You see, with Squidoo's Amazon capsules, er, modules, the code associated with the Amazon link is Squidoo's Amazon Associate Code, not yours. Squidoo is the affiliate. Amazon pays Squidoo. Amazon can't stop Squidoo from paying you half of its commission.

Squidoo's volume bonus usually nets an 8.5% Amazon commission, of which we are paid 4.25% -- except on electronics, which Amazon caps at 4%, so we'd get 2%. Not great. Not as much as I was earning as an Amazon Associate on my own, but it's better than zilch.

Squidoo is based in New York, where Amazon caved in and is collecting sales tax, while fighting the Nexus Tax in the court system. This means Squidoo is pretty safe.

It's not a perfect solution. I'm still trying to find other baskets in which to stow my eggs.

How about you? What are some alternatives to the Amazon Associates program that are working for you, if you live in one of the states where Amazon's affiliate program was cancelled? Please share your suggestions in the guestbook below.

Every day, it seems like the LA Times is posting another article ranting about how Amazon won't collect sales tax, and praising the Nexus Tax as a fine thing.

They don't understand the whole story. Neither do the legislators who passed the Nexus Tax. We HAVE to educate them.

We have to explain how affiliate programs bring income into the state from transactions that happened out of state, income with which we support local businesses by paying sales tax or use tax on our purchases. We have to explain how passing a Nexus Tax results in lost income, since the affiliate programs shut down and then sales tax can't be collected.

Most of all, we have to tell them about all the jobs lost because of the Nexus tax, and how this results in less state revenue.

Every time you see an article in your newspaper about the Nexus Tax, please post a rsponse or write a letter to the editor. Tell them your perspective. Prove to them that the Nexus Tax is doing more harm than good. Good luck.

October 3, 2011: Check your email for a message on "Amazon Associates" and click the link to get your associate account reinstated -- immediately!