Performance Marketing Association Urges Utah Legislature: Say "No" to Internet Nexus Tax Bill

Estimates job and business losses in tens of millions of dollars

Mar 13, 2013, 17:47 ET from Performance Marketing Association

SALT LAKE CITY, March 13, 2013 /PRNewswire/ -- The Performance Marketing Association (PMA) is the latest of a broadening group opposing what they feel is one of the worst taxing measures on Utah's Capitol Hill this year.

The PMA distributed a letter to Utah legislators, urging rejection of Senate Bill 226, known as the Internet Nexus Tax bill, a bill designed to force out-of-state retailers to collect Utah sales tax when they use Utah-based advertisers. 

Instead of collecting taxes, the PMA maintains that out-of-state retailers will simply cut off Utah advertisers and send their business to other states. The PMA estimates there are over 2,300 Utah-based small online marketing businesses that will be affected.

The Senate bill, now in the Utah House, is slated to raise $500,000 in revenue for the state but threatens $200 million in business income earned annually by Utah online marketers and the $11 million in income taxes they pay to the state each year.

SB 226, appearing late in the session, has proved highly controversial, passing the Utah Senate by a single vote and raising questions about its constitutionality. The bill is modeled on various laws passed in 10 other states, aimed at overcoming a 20-year old Supreme Court decision limiting states' taxing authority over out-of-state sellers who have no physical presence in the taxing states.

Passage of the bill also stands in the shadow of threatened court challenges; the PMA succeeded in its case against the State of Illinois, involving a very similar law, where the court ruled the law violated the Constitution and ran counter to established Supreme Court cases. Other parties and associations have challenged laws in other states. 

A two-page opinion of Utah's Office of Legislative Research and General Counsel lends support for a challenge, concluding that if the law passed and were challenged in court, there would be a high probability the Utah law would not meet constitutional standards.

The PMA informed legislators that when similar measures were passed in other states, 1,000 retailers stopped using Internet ad services in those states, with the result that one-third of the state's advertisers went out-of-business, one-third moved out-of-state and one-third were forced into lay-offs or downsizing due to the reduced ad revenues.

The PMA has opposed these laws in other states where the effect of such bills failed to raise promised revenues and has put people out of work. The PMA joins the Utah Technology Council, the National Taxpayers Union and NetChoice which have all weighed in against the bill, as have several large Utah-based Internet retailers.

The Performance Marketing Association (PMA) is a not-for-profit trade association founded in 2008 to connect, inform and advocate on behalf of performance marketing, a multi-billion-dollar marketing channel, which comprises more than 200,000 businesses and individuals. Continued growth of the performance marketing space is expected as advertisers, facing small budgets and big expectations, increasingly look to performance-based marketing initiatives to expand their business. Additional information is available at:

SOURCE Performance Marketing Association