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Affiliate Nexus Laws Imperil Businesses Across Two States

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Refusing to learn from previous examples states are doomed to repeat mistakes

HARTFORD, Conn., May 6, 2011 /PRNewswire-USNewswire/ — While there is an effort underway for both North Carolina and Rhode Island to repeal their “affiliate nexus tax” laws, both Connecticut and Vermont are opting to disregard hard lessons learned there, and have approved similar laws.

Rebecca Madigan, executive director of the Performance Marketing Association, Inc. stated, “It’s unconscionable that state lawmakers are choosing to ignore small businesses in their states, over unrealistic expectations of revenue the state(s) will never collect.”

In both Vermont and Connecticut, the states’ own financial analysts told legislators these bills will result in no new sales tax dollars, and the states will likely lose income tax revenue from the devastation to small business income.

Thousands of small businesses based in Vermont and Connecticut will bear the brunt of these misconstrued proposals. With the result of the businesses having to lay-off personnel, close or consider moving to another state.

In fact, New Hampshire does not collect sales tax in the state and does share a border with Vermont. New Hampshire then becomes the perfect relocation destination for affiliate businesses. In essence, should the Governor sign the Vermont legislation into law Vermont would deliberately pass a law that will drive their own businesses across the border, within a few miles, to a more consumer-friendly, and now business-friendly state.

In both Vermont and Connecticut, in an effort to get their representatives to listen to reason, owners of these small businesses, known as “Affiliate Marketers” vigorously advocated on their own behalf. Explaining that the out-of-state retailers will simply terminate their relationships with them rather than violate the U.S. Constitution’s Commerce Clause.

“This will devastate these businesses and create a lose-lose scenario. Vermont and Connecticut will not realize any new sales tax revenue but they will imperil businesses that were once thriving and contributing to the economy of the state(s),” Madigan continued.

Big-box retailers, such as Wal-Mart and Target, are orchestrating a national campaign to put these small entrepreneurs out-of-businesses. So the very retailers that help shutter Main Street are now focused on the vibrant and growing segment of Affiliate Marketers.

“Let there be no mistake, this isn’t about collecting additional, illusory sales tax revenue; it isn’t about Main Street versus Internet shopping; it is about increasing the profits of these big box retailers and it is a shame these small businesses are in the path of the destruction,” Madigan concluded.

The Connecticut law goes into effect July 1, 2011. The Vermont law is pending signature by the governor, which is expected by next week.

About the PMA

The Performance Marketing Association (PMA) is a not-for-profit trade association founded in 2008 to connect, inform and advocate on behalf of performance marketing, a multi-billion-dollar marketing channel that which comprises more than 200,000 businesses and individuals. Continued growth of the performance marketing space is expected as advertisers, facing small budgets and big expectations, increasingly look to performance-based marketing initiatives to expand their business. Additional information is available at:


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