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Amazon Fires Colorado Affiliates
New Law Enacted, Old Affiliates Redacted

 8:20 pm on Mar 8, 2010 (gmt 0)

Colorado joined New York and North Carolina with an ill conceived plan to collect taxes on Internet sales and has just put a bunch of their constituents out of business or seriously dented their income.

In response to recent legislation in Colorado (HB 10-1193), Amazon.com has sent a letter to its affiliates in Colorado informing them that the on-line sales giant will no longer be advertising through businesses in the state that that make money by referring buyers.


You would think in a downturn economy that Colorado would be sensitive to the needs of the people earning off Amazon, who in turn do pay income taxes on that money.

Nope, instead of trimming government excesses and bloat they go after internet sales tax and punish the people trying to earn a living.

A similar bill almost passed in California but we all rallied in full force and let our representatives know we did not want such a thing to foul up the internet economy.

However, with 3 states down, taxing online sales could be the norm unless people express their outrage early and often as new states start eyeballing internet sales taxes as an option.

Amazon did state they would reinstate Colorado-based Associates if the state of Colorado brought the law into compliance with what the US Supreme Court said was constitutional.

I wouldn't hold my breath, but Senator Greg Brophy said he would try to fix the problem.



 6:47 am on Mar 10, 2010 (gmt 0)

I agree the tax situation needs to be overhauled...sales tax should be payed.

But these states/politicians (like mine) keep complaining that all this untaxed money is flowing out of state to big bad internet tax shirkers, never to be seen again. boo hoo.

But guess what? It's a 2 way street! There are actually internet merchants based in Colorado! People in other states are actually sending money to Co. located internet companies. Often untaxed.

Money being used to pay employees, who buy things in CO and pay sales tax on them, pay CO income tax, etc.


 10:10 pm on Mar 10, 2010 (gmt 0)

We should have a flat 3% tax online paid to one authority that distributes it. Shipping will make sure that in most cases psychical stores aren't disadvantaged by the tax difference.


 10:19 pm on Mar 10, 2010 (gmt 0)

Online stores should not get special dispensations because of the cost of shipping. Shipping is an intrinsic cost of selling goods to distant users, and ought to be covered by what the user is charged outside of taxes.

It is mixing apples and oranges to think that the cost of shipping somehow excuses inequitable tax treatment.


 10:48 pm on Mar 10, 2010 (gmt 0)

We should have a flat 3% tax online paid to one authority that distributes it.

Forcing Joe Entrepreneur to file quarterly or annual returns where he has to spend hours tallying all his sales by state, if not by county or other municipality. Or to buy a program to automatically do this. But he will still have to get the program talking to his shopping cart system, not to mention reprogramming his system to handle the new tax.

Between all the expenses for the wages (and benefits) for the new government workers to oversee this, the work infrastructure (office buildings, desks, computers, etc.) for them to use to do their jobs, and the software infrastructure (tax & reporting software and hardware), one wonders what minuscule part of that 3% would actually trickle back to the states. Or, if the whole 3% did get back to the states, where does all the money come from to continue to feed this new bureaucracy?


 10:59 pm on Mar 10, 2010 (gmt 0)

But guess what? It's a 2 way street!

Not exactly.

There are very few online merchants selling the sheer volumes of Amazon or iTunes.

When either of those get taxed it's going to be a state windfall.


 11:20 pm on Mar 10, 2010 (gmt 0)

Guys and gals, it is not up to the out of state merchant to pay taxes, it is the purchaser of out of state products who must pay the Use Tax in their locale. We don't need new laws, we just need for folks to do what they have already agreed (and don't) to do.


 11:38 pm on Mar 10, 2010 (gmt 0)

If the existing laws were effectively enforceable, there would be little problem.

But they're not enforceable.

Somehow the problem needs to be tackled from a completely different direction.


 12:10 am on Mar 11, 2010 (gmt 0)

buckworks... agree wholeheartedly. What we do not need is draconian federal legislation. We also do not need States introducing extraordinary legislation which overrides their current regulations. Meanwhile, Amazon (and other companies) are responding as they must, and should, by ceasing to business in those States.


 1:25 am on Mar 11, 2010 (gmt 0)

No-one is ceasing business anywhere. Amazon is still advertising and selling in these states. Just dropping those states affiliates

They told me the same in my 'termination' letter.


 5:36 pm on Mar 11, 2010 (gmt 0)

I'm sure more than a few of the affiliates who relied on affiliate revenue are ceasing to do business and/or moving out of the state.

Luckily, we have our eggs spread between many baskets. If the Governator doesn't veto the new bill in California and Amazon (and other affiliate advertisers) terminates all of us California affiliates, we will most likely survive. Although we will miss the revenue, it's no longer a major portion of our overall revenue.


 3:48 am on Mar 14, 2010 (gmt 0)

ergophobe: We need federal legislation on this to put all states on an equal footing and start charging the same state sales tax for mail order.

It is understandable that with the seemingly unlimited power of the federal gubbermint that most people forget that this country is the united STATES of america. Also recommended reading - The 10th Amendment.

I am also buffled by this strange majority wishful thinking to be taxed.

Then again, it is extremely easy to register a business in a different state (oh, and a COUNTRY), and get a mail forwarding address. I don't see why affiliates who actually earn good enough income just wouldn't go around these laws.

Interesting times...


 7:35 pm on Mar 17, 2010 (gmt 0)

CA is now looking to class all out of state independent contractors and anybody who gets a 1099 as taxable and have the company paying them hold 7% for taxes and then you would have to file a CA tax return even though you don't live there.

Here is the link to the article talking about travel agents but it relates to All who get 1099s.

There are already reports of affiliates working with LA based companies getting tax collection letters even though they do not live in CA.


 9:04 pm on Mar 17, 2010 (gmt 0)

(Deleted my post- it was made with faulty logic.)


 10:01 pm on Mar 17, 2010 (gmt 0)

Do they also intend to tax all the out-of-state newspapers, magazines, radio stations, TV networks, and so on where those same companies advertise?



 10:45 pm on Mar 17, 2010 (gmt 0)

It's just a matter of time before they get around to extending that tax to people who use adsense and get a 1099.

They could feasibly make everybody who wants to run adsense in all the states people work in pay CA income tax and file a CA tax return even though they don't live there. Think how many people use adsense and make over 600 a year so they get a 1099.

Isn't it great how in the worse recession we've had in a while, they are figuring out ways to make it even worse for people!

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