According to the AP, the Texas legislature has passed an affiliate nexus law that now just needs the governor’s signature to become law.
We’ve written extensively on affiliate nexus laws and why federal legislation is a better solution here. Nonetheless, we’re not surprised to hear that Texas has become (or is about to become) the latest state to pass affiliate nexus laws.
In the absence of federal legislation like the Main Street Fairness Act, which would allow states to require all online retailers to collect sales tax, states are limited in their actions by the Supreme Court decision that says retailers must collect sales tax only for states where they have a physical presence.
States are seeing their sales tax revenue decline dramatically as more and more shopping migrates online, and it couldn’t happen at a worse time—the recession has already caused record budget shortfalls. As states are forced to cut more and more services, they are willing to try anything to bring back some of that lost sales tax revenue to fund police, schools, libraries, and more. Unfortunately, affiliate nexus laws aren’t very effective (for all the reasons enumerated here).
These are becoming scary times to be an internet marketing affiliate. We hope that the Main Street Fairness Act will be soon introduced and passed in Congress, ending the need for such devastating legislation (for affiliates). But until it is, we expect to see more and more states follow in the footsteps New York, North Carolina, Rhode Island, Illinois, Arkansas, Connecticut, and now Texas.