Amazon cuts off Colo. affiliates because of tax

[Hawkeye-X]

Source: Associate Press

DENVER (AP) - Amazon is cutting off affiliates that help it sell products in Colorado because of a new tax on online sales.
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Affiliates earn money by using their Web sites to link customers to online sellers like Amazon.

Amazon told affiliates in an e-mail on Monday it would no longer pay them advertising fees because of the new law.

The law says online retailers have to start collecting state sales tax themselves or send annual notices to customers telling them to pay the tax.

Amazon says the law is cumbersome and no other state has similar rules.

Read more: http://www.9news.com/news/article.aspx?storyid=134151&catid=339

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I think Colorado is making the right move - trying to tax on those online retailers to try to give back to the community - especially local business stores. I have shopped at Tattered Cover for years, because that's how I grew up loving books - by going to the old Tattered Cover by Cherry Creek (since moved near East High).

I knew Amazon would pull something like this, a reason to keep the books online cheap, and that is one of the reasons Amazon pulled out.

Hawkeye-X

[Kittycat]

1. Wasn't there something odd about how the tax had to be collected?

For example - until this February of last year, I ran an online webstore. I had a way to collect tax on IL sales, and pay it to IL, but no Colorado. How would I go about doing so? How would I be responsible for that without getting the appropriate sales tax ID within the sate of CO, collecting the tax at the point of purchase, and paying it monthly to the state - as I did with IL? Since I'm not a CO resident and do not have a B&M store there, why would I be required to even do that - how would I do that? Or how on earth would I manage sending letters to my customers after the fact, calculating their past purchases telling them to pay "X" to the state? That's a nightmare in itself.

I do understand that the state is trying to collect revenue - all states need revenue at this time, but the way they went about it was pretty messed up.

[msedano]

2. wonderful!

i support every state doing what Co is doing. What an inspired way to support local brick and mortar bookstores, evening the playing field by erasing the taxless price advantage, tipping the scales to the immediate fulfillment of in-stock merchandise, and giving a no shipping fees competitive advantage to your local bookseller. this could make a difference up the supply chain, too.

[deacon]

14. Wonderful??? It mean less income which = more unemployment. n/t

[True_Blue]

24. That was my first thought

A lot of people have started trying to make money online like Ebay and Amazon, because there's no work. I wonder how badly this may financially impact people.

[True_Blue]

25. How about we raise the tax on the dead millionaires?

There are no jobs out there and some people are trying to make money online.

[eleny]

3. There was a time when I would have compared prices & shopped online

But today, I took a fistful of Bed, Bath & Beyond coupons and went to the store over on West Colfax. A number of sales people stopped to ask if I needed help. I found everything I needed, saved a bunch and found it pleasant.

I won't complain about this new law. We're in deep financial trouble and I'm a retired state employee. I'm very grateful for that. So there won't be a negative peep out of my lips over this.

[KamaAina]

4. They're actually threatening California

and other states considering a similar "Amazon tax".

In CA, it's passed out of the Senate and is in the Assembly. Of course, Arnie would rather slash services to the poor and disabled than snatch that 100-foot yacht away from Jeff Bezos. :eyes:

[Bennyboy]

5. I've given this a lot of thought and they should tax them in some way...

even the little guy. It is impossible for a local biz to compete with anyone when it is taxed. The more online sales, the elsss revenue to tax base. And with the closing of the brick and mortar stores along with internet sales, the effect has got to be felt all over at every level of government. As more and more products are bought online, less products will be bought at stores that pay local, regional, state and federal taxes...

[BadgerKid]

8. That could bring about a national internet tax

to be apportioned among the states.

[Bennyboy]

11. well that is what I was thinking......)NT)

[Thor_MN]

12. Another tax to be disproportionally distributed to red states?

Living in a donor state with a rethug in the Governor's office cutting services to the bone to cover budget shortfalls...

[2Design]

6. doesn't hurt amazon much just resellers of used books - amazon

does not have a physical store in the state - the people selling their used books do - having a link on your site, gave you some money for new books but it still linked them back to amazon.

[The Northerner]

7. Amazon.com to drop Colorado affiliates in response to tax law

Source: Denver Business Journal

Online retail giant Amazon.com notified web-based affiliate businesses across Colorado on Monday that it is dropping them in response to an eight-day-old state law applying state sales tax to such purchases.

Seattle-based Amazon.com Inc. (NASDAQ: AMZN) has a national network of bloggers and Internet-based businesses that generate commissions by driving sales from links on their websites to Amazon.com

The Colorado Legislature passed a law that, starting on March 1, requires retailers to notify purchasers how much money they owe from Colorado’s 2.9 percent state sales tax when their purchase originates from a business based in the state. Retailers are also supposed to pass that information to the state so it can collect the revenue.

Bloggers began posting copies of the Amazon.com letter saying the company will not longer market through online Colorado affiliates.

“We plan to continue to sell to Colorado residents, however, and will advertise through other channels, including through associates based in other states,” concluded the letter.

Read more: http://www.bizjournals.com/denver/stories/2010/03/08/daily12.html?jst=b_ln_hl

[Robb]

9. Eh.

I'm no fan of any online giant, but when you pay taxes on a brick-and-mortar business it's because you're (supposed to be) getting something back from that tax -- the grass on the median in front of your store is maintained, or whatever. Tax on gasoline pays for roads, and so on.

...What benefit would Amazon get in Colorado from being taxed in Colorado? :shrug:

[justabob]

15. right

I know people love to hate Amazon here, but I don't see why if there is no physical presence in a particular state, that person/company should owe that state anything. I am also a lot more concerned about the ordinary people and small businesses that use Amazon to sell their stuff. I sell books via Amazon out of my house in Texas.... I understand paying tax in Texas, but what in the world do I owe NY or CO for? (The only thing I can think of the road use for delivery, but I think federal highway money which my income tax goes to will more than make up for the 3-4 packages I might send to any state)

[JoeyT]

23. The roads on which their goods are shipped, for starters.

Though I think this tax goes about it the wrong way as well.

[w4rma]

10. Good. Sales taxes suck. (nt)

[MissMarple]

21. As do all taxes. We don't need schools, bridges, roads, fire departments, and the police.

If you can find another way to pay for things, that would be great. Adopting a progressive income tax might work, but that is a hard sell. Raising taxes on luxury goods might work, but, there are issues with that, as well. Right now, online businesses are undercutting local businesses while using local infrastructure to deliver their goods. Classy.

[deacon]

13. The tax is idiotic. At this time you shouldn't interfere with retail sales at all. They want to do

this is CA. too. It's an extremely stupid idea.

[MissMarple]

20. Amazon is undercutting local businesses.

http://coloradopols.com/diary/11784/a-lesson-to-the-others

[joeglow3]

16. It is up to the CITIZENS to pay the taxes

Everytime you make a purchase from a seller without nexus in your state, you are required to file a use tax return to submit the tax. To me, the beef is with their citizens breaking the law and not paying their taxes.

[Abq_Sarah]

22. They're going after the online retailers

For the same reason the feds have made payroll deductions the responsibility of employers. If it's left to the individual citizen, they will never get their money.

[Love Bug]

17. Other online retailers collect state sales tax. Why not amazon.com?

Sure, not paying sales tax has been a perk we've all enjoyed for years but we had to know it would end sooner or later. Can your state not use the dough? Amazon.com is just trying to keep their unfair advantage over brick-and-mortar stores.

[joeglow3]

18. It is a Federal law

If a company does not have nexus in a state, they cannot be required to collect sales tax. In the pre-internet age, it made complete sense. Could you imagine the admin. costs for a small company in Maine that happened to ship products to 10 different states being required to track, collect & submit all that? The internet changed all that, providing a huge advantage for Amazon.

However, they cannot just blanket change it, or else everyone with a small online business (say, an ebay business) would be required to do this for every state. Therein lies the challenge. They need to change the law, but find a legal way to it and only single out those who are large enough to be able to do so.

Until then, it is the citizens who are breaking the law by not filing a use tax return and submitting the sales tax.

[panzerfaust]

26. I have a small, on-line, publishing business

Being based in Texas, I pay state sales tax on anything that ships to a Texas address. I can look on a state provided chart to figure out what the actual tax rate should be.

However, I do not, and the State of Texas does not require me, to collect sales taxes on items shipped out-of-state.

Given the multiple overlapping taxing authorities the only way to even know what the applicable sales tax would be in another state is to subscribe to a program which can calculate the tax rate for a given address. The cost of such a subscription exceeds my annual profit by manyfold. At the same time, my business would not be sustainable at all if I only sold to Texas residents.

So, Colorado, I will have to look into this. If Colorado expects me to collect the appropriate tax (and if one does not collect the appropriate tax for a given address one is, at least in Texas, heavily fined if it is too much, or too little) then I am just going to have to add a note to my order form: "Sorry, we are unable to accept orders from Colorado".

Why should I have to pay sales-tax in Colorado at all? I would get nothing from Colorado in return for paying taxes there.

A fixed-rate national on-line sales tax (the proceeds then apportioned to the states) would, of course, be a not unreasonable way of dealing with this issue.

However, from my perspective, I am happy with the way things are at the moment.

[joeglow3]

27. On the surface, I would think you would be okay

Typically, what generates Nexus in a state is having property or payroll in that state. Given that you have Nexus in Texas due to your residence and property being there, it makes sense that you have to collect sales tax.

However, the issue becomes MUCH more complicated due to the nuances states have for determining nexus. For instance, if I have a salesperson visit a state for one day in a year, does that consitute payroll for that state and generate nexus?

Without digging into the law, I would suspect Colorado is attempting to assert nexus based on their "affiliates" residing in Colorado. Thus, it appears they are terminating their relationship with these individuals to prevent having nexus there.

Assuming this is the case, I would think you would not have to worry.

[Wildewolfe]

19. They are very hypocritical about it.

I was an amazon Affiliate until yesterday when I got the email (I will post the exact email they sent out at the bottom since I didn't see it in the thread).

We all enjoy the fact that we don't pay sales tax when we buy something over the net. Don't deny it, we all do. But the sad fact is that when the net was new this wasn't a significant cause of budgetary shortfalls to state and local governments. The more the net matures and the more business and commerce on the net matures, the more this once wonderful gimme that we ALL enjoyed becomes a problem. I don't know that Colorado's bill was a valid solution. Frankly I don't think this can be fairly handled at the State Level or you just end up with retail version of Corporate Delewares where the laws favor setting your business up. Just set up here and you only have to charge 3% tax rather than Californias or Colorado's 6%. And it would happen just like that. As we all know industries don't regulate themselves for crap. It would probably need to be like someone said a federal tax fixed at x% that is paid to the state the sale originates from or ships from or some other criteria to at least attempt to make it fair.

In anycase here is the letter the Colorado affiliates received from Amazon:

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Dear Colorado-based Amazon Associate:
We are writing from the Amazon Associates Program to inform you that the Colorado government recently enacted a law to impose sales tax regulations on online retailers. The regulations are burdensome and no other state has similar rules. The new regulations do not require online retailers to collect sales tax. Instead, they are clearly intended to increase the compliance burden to a point where online retailers will be induced to "voluntarily" collect Colorado sales tax -- a course we won't take.

We and many others strongly opposed this legislation, known as HB 10-1193, but it was enacted anyway. Regrettably, as a result of the new law, we have decided to stop advertising through Associates based in Colorado. We plan to continue to sell to Colorado residents, however, and will advertise through other channels, including through Associates based in other states.

There is a right way for Colorado to pursue its revenue goals, but this new law is a wrong way. As we repeatedly communicated to Colorado legislators, including those who sponsored and supported the new law, we are not opposed to collecting sales tax within a constitutionally-permissible system applied even-handedly. The US Supreme Court has defined what would be constitutional, and if Colorado would repeal the current law or follow the constitutional approach to collection, we would welcome the opportunity to reinstate Colorado-based Associates.

You may express your views of Colorado's new law to members of the General Assembly and to Governor Ritter , who signed the bill.

Your Associates account has been closed as of March 8, 2010, and we will no longer pay advertising fees for customers you refer to Amazon.com after that date. Please be assured that all qualifying advertising fees earned prior to March 8, 2010, will be processed and paid in accordance with our regular payment schedule. Based on your account closure date of March 8, any final payments will be paid by May 31, 2010.

We have enjoyed working with you and other Colorado-based participants in the Amazon Associates Program, and wish you all the best in your future.


Best Regards,

The Amazon Associates Team

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What you don't see here are the embedded links to the General Assembly and Governor Ritter's Office so you can bitch about it.

What made it even better were the *2* how to start making money as an Amazon affiliate messages that accompanied the one above... both from Amazon.