DMA Regrets Illinois Governor's Approval of Affiliate Nexus Legislation

STATEMENT FROM DIRECT MARKETING ASSOCIATION

DMA Regrets Illinois Governor’s Approval of Affiliate Nexus Legislation

New York, NY, March 11, 2011 — The Direct Marketing Association (DMA) regrets Illinois Governor Quinn’s approval on March 10 of HB 3659, the affiliate nexus legislation that changes the definition of “doing business in the state” for the purposes of collecting sales tax, to include the use of affiliates who for some form of payment either directly or indirectly refer customers to an out of state retailer. If out-of-state retailers with no physical presence in Illinois have affiliates in Illinois, they will be obliged to collect sales tax on all purchases made in the state after July 1, 2011.

“The bill is nothing more than a termination notice for the 9,000 affiliates in the state. In other states where bills such as HB 3659 have been enacted, advertisers have been forced to end their relationships with affiliates in those states,” said Jerry Cerasale, DMA’s senior vice president of government affairs. “While the bill was styled as addressing ‘fairness’ and ‘leveling the playing field,’ it is hard to see how the state pulling business from, thereby punishing, its own citizens is either ‘fair’ or ‘level.’”

The US Supreme Court has held for more than 40 years that a company must have a physical presence in a state before it can be required to collect and remit sales tax. An advertising link on a website, which is what this bill is about, does not meet that standard. As a result of this new law, three things will happen: 1. affiliates will lose advertising from out of state companies; 2. companies lose a channel of advertising; and 3. the state will receive no new revenue. It is a lose-lose proposition all the way around.

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About Direct Marketing Association (DMA)

The Direct Marketing Association (www.the-dma.org) is the leading global trade association of businesses and nonprofit organizations using and supporting multichannel direct marketing tools and techniques. DMA advocates standards for responsible marketing, promotes relevance as the key to reaching consumers with desirable offers, and provides cutting-edge research, education, and networking opportunities to improve results throughout the end-to-end direct marketing process. Founded in 1917, DMA today represents companies from dozens of vertical industries in the US and 48 other nations, including nearly half of the Fortune 100 companies, as well as nonprofit organizations.

In 2010, marketers — commercial and nonprofit — spent $153.3 billion on direct marketing, which accounted for 54.2 percent of all ad expenditures in the United States. Measured against total US sales, these advertising expenditures generated approximately $1.8 trillion in incremental sales. In 2010, direct marketing accounted for 8.3 percent of total US gross domestic product. Also, in 2010 there were 1.4 million direct marketing employees in the US. Their collective sales efforts directly supported 8.4 million other jobs, accounting for a total of 9.8 million US jobs.

The Power of Direct: Relevance. Responsibility. Results.

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