ClickBank and Taxes, How It Effects You As An Affiliate

Early in 2009 for clickbank and many other affiliate networks, several things changed about the affiliate marketing world in the United States. Many state governments, starved of revenue because of the drastic reduction of other traditional taxes, began hunting desperately for new revenue sources.

And one of the places many of them have hit has been affiliate marketing programs, where they have begun to demand that the amounts people receive from others buying a product through a link on their own blog must be taxed.

Some Affiliate Networks Have Refused This Money Grab…

The responses to this have often been very strong. Some affiliate marketing programs have refused to allow this tax grab, and have simply terminated their relationships with affiliate marketers living in the states that have enacted these tax laws.

So for example, in June of 2009, Amazon denied North Carolina the money it thought it would get from Amazon’s affiliates, by terminating affiliate programs in that state.

Overstock.com did the same thing in July, denying North Carolina, Hawaii, and Rhode Island the tax money those states were trying to acquire. So these states’ efforts to get this extra money not only backfired, but adversely affected their citizens as well.

Clickbank Conforms To The New Tax Laws

ClickBank, however, has taken a somewhat different route. This organization has always tried to cooperate with the various tax laws in the jurisdictions in which its affiliates operate, rather than circumvent them.

For example, any digital products sold to buyers living in the European Union (EU) are subject to a Value Added Tax (VAT), which must be paid to the country in which that buyer resides. ClickBank has been collecting and paying this tax ever since it was instituted.

The company’s arrangement with the vendor of any product is that the vendor actually sells the product to the site for a wholesale price and receives the retail profits back. This means that ClickBank, as the owner of the product, is responsible for collecting the VAT from European Union residents, and paying that tax in the right EU country.

The company has done this all along, and the practice even explains some variations that marketing affiliates sometimes see in their commissions for a single product. If the product is bought buy an EU citizen, the taking of the tax will slightly alter the commission paid.

With new tax laws on affiliate marketing income gradually being instituted in U.S. states, ClickBank is trying to be equally cooperative. Rather than discontinue any relationship with marketers living in the affected states, as Amazon and Overstock did, it tries to help them comply with the laws.

It doesn’t collect these income taxes from them, since they are essentially “self employed” when it comes to the marketing program, but it does give them links to the IRS site where they need to get their Tax ID number. It also explains some of the ins and outs of filling out the correct forms at tax time, and a few of the tax requirements.

Some people feel that affiliate marketing profits should not be regarded as income in the traditional sense, and resist the idea of paying taxes on it. However, ClickBank has always attempted to maintain good relations with any country where its affiliates live, and has tried to be more cooperative.

Rather than disown the marketers who are now subject to extra taxes through no fault of their own, it tries to help them as much as possible, so they can continue to benefit from their marketing but still stay on the right side of the tax laws.

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