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Thread: Amazon Ditches All Connecticut Afilliates Because of Tax Increase

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    Amazon Ditches All Connecticut Afilliates Because of Tax Increase

    This has already happened in some states where they tried to impose tax on buyers from outside of their state. Amazon pulled the plug on those states, too. You would think politicians might have learned from those examples.

    Hello,

    For well over a decade, the Amazon Associates Program has worked with thousands of Connecticut residents. Unfortunately, the budget signed by Governor Malloy contains a sales tax provision that compels us to terminate this program for Connecticut-based participants effective immediately. It specifically imposes the collection of taxes from consumers on sales by online retailers - including but not limited to those referred by Connecticut-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, most of which are based outside Connecticut, 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 we must take this action.

    As a result of the new law, contracts with all Connecticut residents participating in the Amazon Associates Program will be terminated today, June 10, 2011. Those Connecticut 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 today, June 10, 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 Connecticut. If you are not currently a resident of Connecticut, 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 June 10, 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 offer the Associates Program to Connecticut residents and will not affect their ability to purchase from www.amazon.com.

    We have enjoyed working with you and other Connecticut-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 Connecticut residents.

    Regards,
    The Amazon Associates Team

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    This has happened to Amazon affiliates in several other states, as well. I don't know if Amazon has a physical presence in Connecticut, but several states have illegally told Amazon that they must start collecting sales tax.

    The US Supreme Court ruled in 1992 in Quill vs. North Dakota that a state cannot compel an out-of-state company to collect sales tax in a state unless they have a physical presence (a nexus) in that state. In the past few years several states have redefined nexus and claim that the presence of affiliates constitutes a nexus, even though the affiliates are not employees and are in fact independent agents.

    Quill Corp. v. North Dakota - Wikipedia, the free encyclopedia

    Wherever Amazon drops their affiliate program to avoid charging sales tax, Overstock.com and others have also dropped their programs.

    There is a section at ABestWeb.com that is keeping track of all of these battles.

    Affiliate Tax Laws - ABestWeb Affiliate Marketing Forum
    "Democracy is two wolves and a lamb voting on what to have for lunch. Liberty is a well-armed lamb contesting the vote." -- Benjamin Franklin


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    vectro (11 June, 2011)

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    I just feel bad for any affiliates in those states who make a good portion or even all of their living with affiliate programs. They either need to find a new source of income or move to another state to continue their affiliate sales. Affiliate marketers report their profits on their income tax, so I don't see how it helps a state to cut off that source of tax revenue. Not to mention that when these big companies back out, the states are not even going to be able to collect the new tax they're trying to impose.

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    Amazon is not looking at the big picture or the future by shutting down like this in states that impose or want to impose taxes.
    Amazon can collect taxes and still be cheaper than offline companies like wally world, etal.
    And they know it.
    What really gets me is all these internet companies saying that it is too much trouble, etc to collect taxes for each state.
    Yet they already collect VAT in countries that have VAT.
    But the US government is working to finally set up a set tax that all companies doing business on the net must collect.
    I am all for taxation of internet companies.

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    It is not a matter of just collecting taxes for 50 states. There are over 30,000 taxing entities in the USA. I live in a state where each county and city charges a different sales tax that gets added to the state tax. Plus, once you start collecting taxes on behalf of any of these entities, you must allow each entity to audit your books at any time that they desire. That is the root of the tax issue. When you look at the entire picture, it is an unfair burden on the merchants. Unless your company is very large, any audit literally cripples the company while it is taking place. I've seen it happen.

    I worked for a wholesale distributor where we had an opportunity to set up an online retail store and sell products for huge profits. The CFO killed my project because the mainstream distributor business has sales reps physically located in several states. Even though the online store was unrelated to the mainstream business, it would still be owned by that business, which would require us to charge sales taxes in states where our sales employees lived. The CFO killed it because of the time and expense that would go into dealing with each potential tax audit.

    Here is an overview of the issue. I have an online store and I agree with the proposed National Online Sales Tax proposal, as long as it protects merchants from nuisance audits and keeps the paperwork down to a minimum.

    Tax Laws Threaten Affiliate Marketing Programs
    Last edited by TopDogger; 11 June, 2011 at 18:08 PM.
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    Is a workaround to incorporate in another country (e.g. Switzerland) or state (e.g. Nevada)? So your company will make the money and as a director, you can draw an income. There are some companies online that will do the admin for you for like $1000 ish. You need to search on "offshore incorporation" or something like that.

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    Quote Originally Posted by Andy101 View Post
    Is a workaround to incorporate in another country (e.g. Switzerland) or state (e.g. Nevada)? So your company will make the money and as a director, you can draw an income. There are some companies online that will do the admin for you for like $1000 ish. You need to search on "offshore incorporation" or something like that.
    I think you would have to physically move your warehouse and products out of the USA as well as incorporate somewhere else and completely shut down your USA operations in order to get around this issue. Most companies are not in a position to do that. The solution is a simpler and reasonable tax collection method.
    "Democracy is two wolves and a lamb voting on what to have for lunch. Liberty is a well-armed lamb contesting the vote." -- Benjamin Franklin


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    Again, that is what the US government (or some people who filed a bill) wants to do.
    Make it simple to tax online purchases.
    Flat tax and then let the US government split it with states involved.
    Be so much easier.

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    Amazon drops California associates to avoid sales tax.


    With California governor signing into law that companies with affiliates in California must pay sales tax,
    Amazon drops all California associates!
    Some made their living solely off amazon!
    Companies will go under because they only had amazon as their source of income.

    Oh, I feel sowwy for all those people now having to find another way to make money.

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    Amazon is trying to cut a deal with Texas. They plan to build a $300 million facility that will employ 5,000 people if Texas exempts them from collecting sales tax.

    Amazon Attempts Sales Tax Workaround in Texas | WebProNews

    There is a nice map on this page that shows the status of Amazon affiliates in each state.

    The problem is much worse than just an Amazon issue. Every time Amazon drops the affiliates in a state, at least 30 other online merchants also drop their affiliates in that state.
    "Democracy is two wolves and a lamb voting on what to have for lunch. Liberty is a well-armed lamb contesting the vote." -- Benjamin Franklin


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