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elgato
Joined: 24 Feb 2005
Posts: 17240
Location: Texas
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| Posted: Sun Jun 12, 2011 8:58 pm Post subject: Amazon Cuts Affiliates in Two More States to Avoid Taxes |
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Amazon has severed relationships with affiliate websites in two new states — Connecticut and Arkansas — following the passage of measures that require them to charge sales tax on purchases made through affiliates, reports AP. The so-called “Amazon Tax,” doesn’t typically affect sales made directly from online retailers, like Amazon or Overstock.com. In a statement, Amazon said it opposes the laws because they are “unconstitutional and counterproductive.”
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elgato
Joined: 24 Feb 2005
Posts: 17240
Location: Texas
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| Posted: Wed Jun 15, 2011 4:06 pm Post subject: Re: Amazon Cuts Affiliates in Two More States to Avoid Taxes |
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Related:
"Does Amazon Need Its Affiliates?"
Website publishers in Connecticut and Arkansas will soon be kissing a revenue stream goodbye.
Amazon.com's (Nasdaq: AMZN ) popular Associates program -- through which webmasters and publishers can earn as much as 15% in commissions by referring visitors to Amazon's product pages -- is coming to an end in those two states.
It's not that the leading e-tailer has anything against the entrepreneurial residents of Connecticut and Arkansas. As far as I know, CEO Jeff Bezos doesn't have any former flames living in Bristol or Little Rock. Amazon's decision is being fueled by the same state-based legislation that has forced the company to cut ties with affiliate marketers in North Carolina, Rhode Island, and Hawaii.
If state legislators propose e-fairness legislation that forces online retailers with affiliates in that state to begin tacking on and collecting sales tax, Amazon will sooner cut ties with its associates than impose higher prices on everyone in the state.
We're not just talking about Amazon, either. Blue Nile (Nasdaq: NILE ) and Overstock.com (Nasdaq: OSTK ) have also nixed certain states to maintain their Web-based pricing advantage.
Cash-strapped states have been hoping that taxing online retailers that don't have a physical presence in the state can help fill their emptying coffers. The easiest legal path is to imply that doling out referral commissions to state residents qualifies as having a corporate presence. Unfortunately, the e-tailers have responded by simply taking a step back when it comes to affiliate marketing.
The end result is typically a lose-lose situation. The e-tailer will miss out on incremental sales through the local publishers, and the state not only misses out on its desired tax grab but now also has residents earning less taxable income.
We're at the point where Amazon may no longer need the Associates program, anyway.
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