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Internet Sales Tax Bill Eyes "Affiliate" Programs

Bill would require companies with referral programs with Texans to pay sales tax

By Lita Beck
|  Thursday, Apr 7, 2011  |  Updated 9:11 PM CDT
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Tax Bill Eyes Internet "Affiliate" Programs

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A bill in the Legislature would require Internet businesses with referral programs with Texans to pay sales tax.

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A Texas House committee has unanimously approved a bill that could result in the end of "affiliate" programs on Texas blogs.

Currently, only companies that have a physical presence within Texas are required to collect state sales tax. The customer is required to pay the tax instead -- but rarely does.

But House Bill 1317 would expand the requirement to collect tax to online retailers that have referral programs with Texas residents or sell at least $10,000 worth of products to Texas customers through such programs.

Such affiliate programs often pay bloggers and websites a commission for products bought by readers who follow a link or ad on the website to the retailer.

Internet companies have simply ended their affiliate programs with people in states that have passed measures similar to the Texas bill.

Amazon.com and Overstock.com announced last month that they would halt their affiliate programs in Illinois when it enacted such a change.

Amazon.com has already had a dispute with Texas over the collection of sales tax. In February, the retailer announced it would close a warehouse in Irving after the state insisted Amazon.com pay sales tax, saying the facility constituted a business presence in Texas.

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