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Amazon Shuts Down Affiliate Program In Arkansas

A win for Walmart



1:03 pm on Jun 11, 2011 (gmt 0)

10+ Year Member

In a one two punch, Arkansas (home to the world's largest retailer corporate offices, Walmart) was the latest state to fall in the war between big box retailers and online retailers. Arkansas Governor Mike Beebe signed Senate Bill 738 into law, with Amazon responding by sending out the email, "Notice of Upcoming Contract Termination Due to New Arkansas Law" to publishers in Arkansas:


For well over a decade, the Amazon Associates Program has worked with a large number of Arkansas residents. Unfortunately, a new state tax law signed by Governor Beebe compels us to terminate this program for Arkansas-based participants. It specifically imposes the collection of taxes from consumers on sales by online retailers - including but not limited to those referred by Arkansas-based affiliates like you - even if those retailers have no physical presence in the state.

We opposed this new tax law because it is unconstitutional and counterproductive. It was supported by big-box retailers that seek to harm the affiliate advertising programs of their competitors. Similar legislation in other states has led to job and income losses, and little, if any, new tax revenue. We deeply regret that its enactment forces this action. The unfortunate consequences of this legislation on Arkansas residents like you were explained to the legislature, including Senate and House leadership, as well as to the Governor's staff.

As a result of the new law, contracts with all Arkansas residents participating in the Amazon Associates Program will be terminated on July 24, 2011. Those Arkansas residents will no longer receive advertising fees for sales referred to Amazon.com , Endless.com , MYHABIT.COM or SmallParts.com . Please be assured that all qualifying advertising fees earned on or before July 24, 2011 will be processed and paid in full in accordance with the regular payment schedule.

You are receiving this email because our records indicate that you are a resident of Arkansas. If you are not currently a resident of Arkansas, or if you are relocating to another state in the near future, you can manage the details of your Associates account here . And if you relocate to another state after July 24, 2011, please contact us for reinstatement into the Amazon Associates Program.

To avoid confusion, we would like to clarify that this development will only impact our ability to continue to offer the Associates Program to Arkansas residents and will not affect their ability to purchase from www.amazon.com .

We have enjoyed working with you and other Arkansas-based participants in the Amazon Associates Program and, if this situation is rectified, would very much welcome the opportunity to re-open our Associates Program to Arkansas residents.


The Amazon Associates Team


1:37 pm on Jun 11, 2011 (gmt 0)

10+ Year Member

Now, let me be the first to respond to my own posting. The posting was not intended to produce a lot of whiners. Instead, it was the step stool for me to show how thinking things through instead of going off the deep end can make bad news, non-news.

When I first got this news, I will admit, it sent a shiver down my spine while thinking about what other programs might fall and how this would affect me long term. I make about 70% of my income from affiliate publisher programs, the other 30% from in-house advertising, which results in a six figure income. Once the shiver was gone, it became apparent there was a solution, and only weeks before I had found it.

As luck would have it, only a couple weeks ago I decided that it was time to incorporate one of my businesses and change another to a LLC. After some research, it became apparent to me that I could do this online, quickly, cheaply and easily in the State of Nevada.

I found an online company to provide me with a mail box address in Las Vegas. Set it up and paid for it online.

Since I use internet phone from a major internet provider, a company I have used for five years, for another $5.00 a month I was able to add a Las Vegas, Nevada phone number, which rings to my main phone.

Then, I found a company to set up both my LLC and corporation in Nevada. Within 24 hours it was all done, all the paperwork was in my hands and I had an EIN for the corporation. The documents were both emailed to me as attachments and sent by FEDEX.

The company has a wonderful online interface that allows me to easily manage both the LLC and the corporation and they monitor both companies for me to ensure they stay compliant with Nevada laws, filing whatever papers need to be filed, for me. Everything is done electronically.

The next day, I went to the bank and set up the bank account. I simply took my incorporation papers, list of officers and EIN to the bank and it was easy as setting up any other bank account.

With the work done, I went to each affiliate acccount I had online and began reapplying under the corporation name, address, phone and EIN. I hadn't gone to Amazon yet. So, right after I got the letter, I went over and set that up too. The new Amazon promotions using the corporate account are now on one of my websites.

I chose Nevada because it's the one state that will NEVER pass legislation to protect brick and mortar retailers. They make their revenue through tourism based businesses and being the headquarters for corporations, not on shopping.

So, for me, while this news could have been the beginning of some stressful weeks and months, it was a non-event.

If you live in one of the states that have made it impossible to earn a living online, it's time to think about taking some action to 'move' your business operations to a pro-online business model state. You may not want to go to the length that I did. But, as you can see, it's quick and easy to do, with numerous options available to you.


5:43 pm on Jun 11, 2011 (gmt 0)

5+ Year Member

Did you lawyer and your accountant both sign off on this?


5:55 pm on Jun 11, 2011 (gmt 0)

WebmasterWorld Senior Member wheel is a WebmasterWorld Top Contributor of All Time 10+ Year Member

Yeah, I'd run it past them. However it seems like it should work since they actually set up an LLC.

I previously was incorporated in Deleware, yet did all my business from a different country. Never even been to Delaware. Phone, mailing address, website etc, all out of country (still filed US tax returns though). Seems like the same kind of thing.

I make about 70% of my income from affiliate publisher programs,

This is the most curious thing I've read in quite a while. Someone making money as an amazon affiliate? I thought that was over. Shrug, what do I know anyway?


10:51 pm on Jun 11, 2011 (gmt 0)

10+ Year Member

Very interesting, and thanks for the post. Does this mean you have an LLC in Nevada and another in Arkansas?


12:38 am on Jun 12, 2011 (gmt 0)

WebmasterWorld Senior Member

I second the rec to check with an attorney and accountant. There's more to running a corp than that. For example, I'm a resident of California (who just passed an Amazon bill). CA's corp laws are absolutely draconian, so even if I have a corporation from another state, I'll almost surely end up paying double taxes:


So this solution could end up costing a Californian more than they make from Amazon. Your mileage definitely may vary, especially if so much of your income is from Amazon. I'm just putting this out there so people won't assume it's automatically that simple.

(California makes *everything* that difficult and expensive. I cannot wait to move.)


1:43 am on Jun 12, 2011 (gmt 0)

5+ Year Member

I chose Nevada because it's the one state that will NEVER pass legislation to protect brick and mortar retailers. They make their revenue through tourism based businesses and being the headquarters for corporations, not on shopping.

Actually Nevada is in huge deficit and is making noises about a new sales tax law.




4:09 am on Jun 12, 2011 (gmt 0)

10+ Year Member

Yes, setting up a corporation can be very complicated when you reside in a anti-business state. There are other factors to consider than I mentioned, which depend on your lifestyle and business model.

For me, this solution works perfectly. Can't fuss over having a home office in Las Vegas and needing to go there for business a few times a year, in addition to those trade shows that just have to be attended in order to stay on top of things. For $400 a month, a modern business class studio apartment can be had, complete with swimming pool in a nice neighborhood. A full-service business office is only $125 a month. I can use the apt or office when I am in town, yet have no fixed office, it's shared space with a fixed mailing address.

I actually figured that out from watching what you and I think are American corporations (traded on our stock exchange) formed in Panama. After looking into what their home office was like, I was surprised to find it was a a series of cubicles and conference rooms, shared space, with an ala carte lawyer and mail drop. Why? Tax advantage for American corporations that are actually under the laws of Panama.

Car registration is expensive in Arkansas, it's taxed every year as property. I'm paying $1000 a year for mine. It's less than $100 in Nevada. Flights there are only $49 from here. I think you can begin to see the big picture. Yeah, it can be so much more than I posted. It really depends on your needs and what exactly you want to accomplish by incorporating in another state.

For years, I have done research on companies that are incorporated in Florida. It's another state of choice. Browse through their online database, and you will see it's loaded with corporations who only have a agent in Florida, have likely never stepped foot in the state, everyone on their board lives somewhere else, some not even in the USA.

The big worry can come with two other factors, whether a state is a community property state and whether they have a state income tax. Arkansas is not a community property state, though Nevada is. Nevada has no state income tax, though Arkansas does. When you consider the options for setting up in Nevada, it becomes clear the advantages are immense.

The lawyer and accountant? Yeah, they are the ones who suggested it.

Nevada adding an "Amazon Tax"? Yeah, they made noise, then shut their mouths, tucked their tails and went home. They are a big employer in Nevada, lot of jobs to lose if Amazon gets their panties in a twist.

In fact, "Legislation that would have required Amazon to collect sales tax on purchases shipped to Nevada failed in committee in the state legislature in May 2011. The legislation was proposed by the Retail Association of Nevada and was expected to generate $16 million annually in additional sales tax collections. Concerns about whether such a move might prompt Amazon.com to close its distribution center in the state were partially responsible for derailing this legislation."

How many jobs at the distribution center? "Amazon.comís Fernley, 1 million square foot facility employs an average of 700 full-time employees and over 2,000 workers during peak season."

No state needs that kind of threat in this economy, least of all Nevada.


8:31 am on Jun 12, 2011 (gmt 0)

WebmasterWorld Senior Member tangor is a WebmasterWorld Top Contributor of All Time 5+ Year Member Top Contributors Of The Month

I'm a bit confused. Amazon has a distribution center in Fernley, NV... theoretically tax IS ALREADY BEING COLLECTED (for Nevada sales), so what other Nevada "tax" is on the table? I must be missing something. Meanwhile, beware the shell "corp" method of hiding location or avoiding taxes... most of the time these are caught and (for all that was initially saved in taxes) penalized with fines and, in some cases, jail time. Escaping Arkansas taxes by "apparent" location in Nevada... see above.


2:48 pm on Jun 12, 2011 (gmt 0)

WebmasterWorld Senior Member

Tangor, IIUC, the "physical presence" a corp has in a particular state needs to be a retail unit. Distribution and fulfillment centers aren't selling anything directly, so they don't count.


8:24 pm on Jun 12, 2011 (gmt 0)

10+ Year Member

Tangor, I'm talking about six month residency per year via that cute business class apartment with pool. It's absolutely legal in all 50 states. You pay your state income tax, where applicable, based on where you lived for six months and a day.

Many of us in this country have the flexibility to move about at will. For a year I was on the road with this business, staying in beach condos for months at a time. I still owned a home, but didn't spend a day in it for a year. Since the state my home was in didn't have a state income tax, it didn't matter, tax wise. Then, the state I was traveling within also didn't have a state income tax.

It is cheaper to own a nice home in a modern, progressive, educated thriving, town in Arkansas than it is in Las Vegas. Home ownership is not the measuring stick by which residency is measured. Since Las Vegas is pro-business, it's cheaper to rent a nice, business class apt than it is in Arkansas. It's a matter of taking advantage of what both states excel in.

Technically, the home office in that Vegas apt will suffice as a business location. I've had a home office for ten years and never had an office open to the public.

A shared office is just another write-off. Since the shared office has ala carte hardware, services and personnel available the home office might not have, it's justifiable for home office business owners. If you do need a meet-up, the shared office is where you want it to take place.

In fact, Nevada, at the corporation level, has an business set-up option that specifically gives the option of having a home office as the primary location for the corporation.

The problem people have is thinking of a corporation as something like IBM. In Nevada, one person can form a corporation. One person who makes all their money online doesn't need a towering office complex. All they need is . . . a home office. Nevada is hip to that fact, very savvy in understanding the needs of today's business owner.

Here, I can leave on Thursday morning come back on Sunday night for $49 one way to Vegas and do that every week, spending 3.5-4.0 days a week in Vegas. At the end of the year, I've been there more than half the year. Or, I could spend the entire winter there, while it's coolest, and half weeks for six months. It's called split residency and there is nothing illegal about it.

Is it a tax dodge? Sure, it can be if you choose the right two states. It is a legal tax dodge? I won't give you tax advice, I'm not qualified to do that. I find no law that says I can't own a home in one state, rent in another, equally split my time between the two and run the business from two states, with the choice to decide which state is the primary location. I mean, this is America here, at least today anyway.


6:22 pm on Jun 14, 2011 (gmt 0)

WebmasterWorld Senior Member planet13 is a WebmasterWorld Top Contributor of All Time 5+ Year Member Top Contributors Of The Month

...in a modern, progressive, educated thriving, town in Arkansas...

Isn't that an oxymoron?


3:02 am on Jun 15, 2011 (gmt 0)

10+ Year Member

Planet13, you'd think so. I did, until I took a 5-week-long vacation here. This town is one of the best kept secrets in the country, an exception to every Arkansas, Southern and Midwest USA rule and/or joke. Once I discoverd this oasis, I couldn't sell my home in another state and move here quick enough. All I needed was to add the corporation in Nevada to make the dream world complete.

I don't say this lightly. I've traveled extensively throughout the country, coast to coast, border to border and beyond the borders, for a period of 40 years. I've spent a month or more in over half the 50 states, enough to really get a feel for each one. It was a complete shock to me, having thought I'd seen it all.

Sometimes in life . . . we get lucky in our travels.


4:14 am on Jun 15, 2011 (gmt 0)

WebmasterWorld Senior Member

There are a number of cities like that spread out through the Southeast.

BTW, you do know Nevada is considering an Amazon tax bill? [lvrj.com...]

I don't think there's anywhere we can stash a corporation that this isn't going to happen. Except in those states where Amazon already charges sales tax and therefore has no reason to shut down affiliates.


9:00 am on Jun 15, 2011 (gmt 0)

WebmasterWorld Senior Member tangor is a WebmasterWorld Top Contributor of All Time 5+ Year Member Top Contributors Of The Month

@MsHuggys and @diberry... I tend to be too tongue-in-cheek for my own good and perhaps to the confusion of others. My apologies. The concept of Taxing the internet is NOT going away, there will be no way to escape it because the BUYERS aren't upholding their end of the "deal" which is DECLARING PURCHASE and then PAYING TAXES on products they purchase and bring (or cause to be brought into) their State as EVERY STATE WHICH COLLECTS SALES TAXES REQUIRES. So... here we are. This Arkansas legislation, or something even more Draconian, will eventually happen at the FEDERAL LEVEL. Amazon, meanwhile, will cut loses by cutting affiliates State by State (which if anyone is really honest ain't a big part of their biz, yours or Amazon's) whenever a State passes legislation. Ultimately this legislation will not affect AMAZON'S BOTTOM LINE. Reality? Loopholes get shut all the time... and are getting shut faster these days since the current taxation on business has driven most companies off-shore (but that's a different kettle of fish and delves into politics which is most outside the scope of this forum, thus I club me first and say no more).

Merely suggesting two things: 1) Conduct biz as usual as long as you can, but be ready to make changes as it won't last forever, 2) Don't plan your financial future with hodge and podge gimmicks as that will last even shorter (look at all the States jumping on the "Amazon Tax" wagon). Might get a few years out of it, but will not pay off your mortgage...

And crowing about how to "do it this way" in public is not a good idea, even if some of us have been doing the since the late 1960s... long before an equally tax-hungry Congress was in office... Anyone remember the mid-1980's "modem tax" flying about the BBSs about that time? Didn't happen then, but it HAS happened in the Amazon taxation starting with NY to all the States inbetween.

NON-USA readers are not concerned with this thread... you're already dealing with VAT and THRESHOLDS and probably a few other things I don't know about...


1:57 pm on Jun 15, 2011 (gmt 0)

10+ Year Member

Dilberry, see above. Nevada shot the tax down.

Oh yeah, I think I just heard the O word. Offshore is where it heads when states crack down. It's even easier to move it out of the country altogether. Many of the business owners in my age bracket today, worked for companies who packed up and left the USA leaving us and those around us wondering what we were going to do to support our families.

The answer was to start our own business because corporate jobs had become few and far between. What we learned from that experience was this. When the business climate goes south in one state, you move to another and when moving to another state becomes too big a pain, you move out of the country. Big business did it and small white collar business will too.


3:15 pm on Jun 15, 2011 (gmt 0)

WebmasterWorld Senior Member

Yes, Nevada shot it down for now, but so did TN in order to get Amazon building distribution centers and providing jobs... but now they're right back at it again, and TN is pretty darn business friendly.

I agree with Tangor. For me, sadly, the best option will be to suck up the Amazon loss (about 10% of my earnings) because any other solution that's currently practical for me would cost more than I make with Amazon. My plan for years has been to move out of California to a less expensive city in a business-friendly state and incorporate there. I suspect by the time I can swing that move, this will all be ironed out with a Main Street Faireness Act of some sort, and my residency will no longer be a factor in working with affiliate programs.

In the meantime, if California does enact this bill, I'm going to look into claiming unemployment on those lost affiliate earnings. I doubt it can be done, but just on principle, I'd like to screw California in every way possible, since it seems bent on doing that to its residents.

Also, from now on, I'm buying EVERYTHING I can on Amazon. The sales tax was never a factor for me - Amazon's often cheaper with better selection - but now it will be. I don't want to give Cali one cent I don't have to.

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