Got screwed by the California Amazon affiliate decision; any recommendations?
- Thread starter SEO4hire
- Start date
Why would the IRS care? Your federal income tax is the same whether you're in TX or CA or any other state.
Bad advice to move your business to TX while you're still living and doing the work in CA.
You do know that CA will see you get a 1099 from Amazon on your tax returns. Unless you plan on living in CA but paying taxes like you live in TX. Another bad idea.
You do know that CA will see you get a 1099 from Amazon on your tax returns. Unless you plan on living in CA but paying taxes like you live in TX. Another bad idea.
@papa. Yes, my mistake. I tried answering while getting yelled at by my wife 
.
I'm guessing if you asked the CA taxing authorities if a person living and doing business in CA while having an LLC in another state like Nevada constitutes Nexus, I think they would have a different answer than you. At the end of the day, I'm not sure if the affiliate can be held liable for any taxes not collected. I think it would be Amazon's responsibility. I'm guessing the few sales Amazon gets from most CA affiliates don't outweigh the millions in taxes they would owe for getting caught having affiliates based in CA.
There's been lots of debate on different forums on the subject. My advice is always ask an attorney and an accountant who knows the law. Unfortunately, most have no clue... including the lawmakers.
Also, the income from the Nevada LLC will be on your California return. And California could then find out you're an Amazon affiliate if they wanted to.
.I'm guessing if you asked the CA taxing authorities if a person living and doing business in CA while having an LLC in another state like Nevada constitutes Nexus, I think they would have a different answer than you. At the end of the day, I'm not sure if the affiliate can be held liable for any taxes not collected. I think it would be Amazon's responsibility. I'm guessing the few sales Amazon gets from most CA affiliates don't outweigh the millions in taxes they would owe for getting caught having affiliates based in CA.
There's been lots of debate on different forums on the subject. My advice is always ask an attorney and an accountant who knows the law. Unfortunately, most have no clue... including the lawmakers.
Also, the income from the Nevada LLC will be on your California return. And California could then find out you're an Amazon affiliate if they wanted to.
Sorry, one more addition. The chances are pretty slim you'll get caught. Not really sure how / why California would look at a Nevada LLC to see what line of business you're in. But, maybe one day you're ultra successful, get quoted in some newspaper, someone in the taxing authority reads in and decides to investigate and puts 2 and 2 together.. Yes, its a long shot but something like that could happen.
The chances of being caught are slim, but the odds of being butt raped by Bubba in prison if you are caught are high.
@shark, I'm not really sure what happens if you get caught? If you're reporting the income to CA, then you're not avoiding taxes. Essentially, California would go after Amazon (and all other retailers you were affiliated with) for back sales tax. Its possible that those merchants could have some reproductions against you. I'm guessing they would probably sue you and bankrupt you and your grandkids' grandkids.
Lol - I've had more than my share of typos like that...
The only point I was trying to make is that you are knowingly avoiding the sales tax rules.
When it comes to taxation and bending the rules the government is not forgiving. I'd prefer to not find out. From what I've been told by my CPA hiding income is the biggest thing that will get you in trouble. I don't think you are doing that but who knows?
Form a LLC in another state such as Nevada. There are brokers who will both file and act as mail room/secretary.
like eveyrone said, llc in nevada makes great sense. A buddy of mine did something similar and he got screwed the same way you did by amazon
Maybe I just think a little different than most on this forum. If you're looking to build a substantial income through Amazon and others and live in a 'nexus' state, just forming an LLC in another state is not a good idea.
For example, the NC law reads:
"A retailer is presumed to be soliciting or transacting business by an independent contractor, agent, or other representative if the retailer enters into an agreement with a resident of this State"
What do you think their definition of a 'resident' is? Do you think they care your LLC is registered in Nevada? You're going to argue that Amazon is entering into the agreement with the LLC and that LLC is not a resident of NC. I agree with you. Just not sure the NC taxing authority will. I think the technical definition would be that a business 'resides' in every state that it has any employees. Meaning, if you work in NC but are registered in DE, your business 'resides' in both states.
If you want to stay legit, see what Fatwallet did. They physically moved, not just registered their LLC in Wisconsin.
All of these laws targeting affiliates are BS and hopefully there will be a national solution or anything in the near future that doesn't put us in the cross hairs.
For example, the NC law reads:
"A retailer is presumed to be soliciting or transacting business by an independent contractor, agent, or other representative if the retailer enters into an agreement with a resident of this State"
What do you think their definition of a 'resident' is? Do you think they care your LLC is registered in Nevada? You're going to argue that Amazon is entering into the agreement with the LLC and that LLC is not a resident of NC. I agree with you. Just not sure the NC taxing authority will. I think the technical definition would be that a business 'resides' in every state that it has any employees. Meaning, if you work in NC but are registered in DE, your business 'resides' in both states.
If you want to stay legit, see what Fatwallet did. They physically moved, not just registered their LLC in Wisconsin.
All of these laws targeting affiliates are BS and hopefully there will be a national solution or anything in the near future that doesn't put us in the cross hairs.
