Now, before I get started, these are just my thoughts and opinions. I am not a Lawyer or an Accountant and cannot give you legal advice. These are just my opinions and things I have seen happen in other States. If you want legal advice (which I highly recommend you get), please contact a registered Lawyer or Tax Lawyer to find out what the best thing you can do for yourself and your business is.
So there is a new bill coming up with the new budget this year in Virginia that will have an effect on everyone across both parties and straight down the other parties. It isn’t a Democrat Vs. Republican Vs. Libertarian Vs. everyone else thing. It is a we want money without thinking of the downsides of what will happen thing.
The Commonwealth of Virginia is about to propose a tax on Internet Shopping and even on Companies who advertise through most traditional offline means (besides direct mail), where they will not only have a serious effect on the way you can shop both online and offline, but what may be available and no longer available to residents of the Commonwealth of Virginia.
The thing with this tax is that it not stops you from being able to get coupons or cashback on most of your favorite websites, but it will also effect what you can find in your local newspapers.
So I am going to start this post with how if this law passes through the Commonwealth of Virginia, how it may effect you and the issues and problems you will face online. Then I will talk about some of the things that you can do to help prevent the law from passing and what we are trying to do to help prevent it from being a reality in the Commonwealth of Virginia.
What will the VA Internet and Advertising Tax SB660 more than likely do to your ability to shop and save?
The first thing is that a lot of people are going to loose their jobs and their companies.
Virginia is home to a lot of sites for coupon shoppers and content, review and blog sites as well as online stores and personal favorites like CookieSurpises.com. (I’ll post links to them upon approval from the individual companies. Virginia is also home to Media Agencies and Marketing firms which will also be effected negatively.
If this bill passes like it has in other States, we should expect to see the following things to happen:
1. Around 100 major retail stores will pull the plug on advertising on websites and newspapers based in or that have circulation in Virginia. This will make coupons and cashback sites based here go under also meaning you will no longer have access to these through trusted channels. You may also loose the coupon and Sunday saving sections of your favorite newspapers.
2. Some stores may no longer sell to Virginia residents. Taxes are hard to track and even harder to track when you have to keep track of who sells what and how much of it. It may actually be easier for these companies to just completely pull out of the State making less products available for you to buy and less revenue for the State since you cannot buy the product anymore and the companies are no longer spending on Ad Agencies and Advertisements. (This is more of a rare thing though). I am also curious to see if they consider Mall billboards for stores in the Mall would count as Nexus. This opens up an entirely new ridiculous way to try and track sales from an ad.
3. Income taxes drop and unemployment rises. If this tax passes, tons of people are about to loose their companies, if and when VA follows the same way most other States advertisers have gone. If you are declared to have nexus in VA, many companies are going to drop their Affiliates which in turn causes them to begin removing sites that you shop on or go to for coupons having those coupons and sales available. If you are a Marketing or Media company, you may loose your Clients if you cause nexus in VA and you will have to watch as your Clients will move to Agencies in other States. You may also have advertisers pulling out of Newspapers and Billboard companies since that will more than likely cause you to have nexus as well.
That means no more coupons or Sunday specials, no more deals or knowing when the Nordstroms Annual and Half Annual Sales are (If Nordstroms would pull), etc… It may also mean no more advertising dollars in VA for Media companies and outlets which means less money coming in and a worse off economy. It would be almost impossible to track down the sales from these channels 100%, especially because of the cross over with NoVA and DC and even MD and because offline is not completely measurable so the only option may be to pull.
Unemployment would rise from this law because of a few things. Newspapers have already taken a huge hit. Take papers like the Examiner or any of the local papers in VA. If they have to find a way to track sales because of Nexus and for each Advertiser, guess what, they may not be able to find a reliable one (tax wise) which means they cannot provide a solution for what keeps them in business. Also, how can you actually judge how many people show up to a community theatre from a Newspaper ad, unless they actually bring the ad to the event. What about the people that see and call a phone number. Not all companies can actually afford mnultiple phone numbers or to hire people to properly track calls in from different numbers in different publications. The other thing to think about are the non profits and associations advertising to get a message across and the result may also be more donations. Can we tax the associations and how do we track it? Think about the ads ad Reagan/National Airport which looks like it is part of VA and Dulles where they try to reach diplomats and other goverment people. If the advertisers pull, the Media companies which are already struggling to sell ad space and survive will start going under faster and have to fire more employees.
As we’ve seen in other states, Affiliate companies and Management companies will also start to go under which not only means they have to find a new job, and their employees do too, and since the law takes away their income, the Commonwealth also looses their income taxes. This is actually a lot larger than you all think.
Some of the local groups and services in the Commonwealth of Virginia rely on these taxes and when they are cut, guess what, they have less money and since the states are bankrupt, the local firefighters, schools, police, etc… loose their money too. We may also then loose our Police, our Fire, etc… since budgets will have to be cut due to the loss of income taxes, advertisers and advertising dollars, etc… Even California decided to drop it and guess what, they get to have a slightly healthier economy from ecommerce. People are still employed and Agencies got to keep their Clients also resulting in more out of state money coming into their State that is also taxable.
The thing that the Politicians haven’t realized is that although it seems like a great and uptapped resource, it is actually extremely hard to track and process and companies would rather pull than stay. This has been proven over and over in other States. Some people that used to have successful online companies have now been unemployed and sales have been cut off completely to certain audiences and the revue from websites now goes to States like California or Delaware which do not have these taxes. Unfortunately for Newspapers and other companies which are only local, there is no other option for consumers and for them. They may also have to consider their web properties just like Virginia Affiliates, Webmasters and Advertising Property Owners and their employees may have to go find new jobs.
So what can you do as a Marketer, an Agency or a Media and Advertising Outlet?
The first thing to do is to start getting a petition ready. Not only should Online Marketers, Agencies, etc… sign one, but we need to get our neighbors, our media partners, etc… involved. Since the Newspapers will also be effected by this, we should also be constantly pitching them to run a petition or form to mail back in their VA runs. (VA is home to the DC Examiner, Gannet (USA Today, and a bunch of other major papers and magazines), and a ton of traditional media outlets. They have the adspace available to reach the consumers and we should be telling them that they may loose access to coupons and shopping specials since the Advertisers will no longer be advertising because of the Tax Nexus.
Everone needs to start sending in complaints and concerns to their local and Commonwealth nominated politicians to show how many people in the Commonwealth are opposed to these taxes.
Marketers and Agencies need to start showing how their companies will go under and show the income lost from the Commonwealth if the law passes and then the Advertisers pull their resources and partnerships (Which will happen). Don’t be afraid to also show your website traffic and how you can reach their voters and show the voters how you will be showing that they voted to bankrupt your company and how they choose to tax their online shopping. We need to start preparing for the meeting and hearing and everyone needs to present their own case but in different ways.
We can all present our story, but if it is not in a way that our Grandparents would understand, and not unique to each other and everyone else, the Poloticians will all get bored and ignore us. We need to show numbers like how many people will be unemployed. How much income tax will be lost. How many people are opposed to having their online shopping be taxes and how many companies will pull their ad dollars out of the Commonwealth. These are things the Politicians understand and things we need to prepare. I am saying we because if it passes in VA, MD and DC can easily start to follow right after.
If you visit the Commonwealth of VA site, you will also see that they have signed up for Twitter and other Social Media outlets and sites as well. We need to start tweeting our concerns to them and make sure they get reminders from the thousands of VA residents that will be effected or loose their jobs and incomes due to this unfair and horribly thought out tax law.
The last thing to do, besides attend the hearing, is to meet with your local representative or congress person.
Walk them through the concerns and show them how this has hurt the residents in other States.
It is your job as a citizen and their job to protect you. Passing laws that may hurt their residents and may also hurt their own Economy are not a good idea. However, most of them are not aware of what may happen if they pass these laws so they think they are a good idea. That is why it is up to us to help educate them and show them the negative impact that passing laws like SB660 and the negative impact that these laws may have on their Commonwealth or State.
Two resources that I recommend following up with or reading include:
There are great discussions on how to fight tax laws, what has worked and what has not. I also recommend donating money to Affiliate Advocacy so that they can continue to provide us with information and updates on how we can protect ourselves.