Amazon Cuts Off Colorado Affiliates Over Taxes
By Tom Ryan
Amazon last week ended its relationship with Colorado-based
affiliates in retaliation of a new state law aimed at getting out-of-state,
online retailers to collect sales tax.
Amazon previously cut off affiliates in Rhode Island and North
Carolina when the states passed online sales tax laws. These state laws argued
an online retailer’s affiliates constitute a presence within the state
and therefore they had to pay sales tax. In New York, Amazon is suing the
state over its law but in the meantime is collecting the sales tax.
But the final version of the Colorado legislation signed last
month removes the affiliate portion by basing its argument on "use
tax" instead of "sales tax." Most states have required for many years that
tax be paid on merchandise purchased out of state and either delivered or
bought home, although it is challenging to collect.
Colorado’s plan forces online retailers like Amazon to turn over
a yearly list of purchases made by Colorado residents. Amazon also will have
to send Colorado customers a yearly tax invoice. Sponsors hope the process
will be so cumbersome retailers simply will collect sales taxes instead.
In its e-mail to affiliates, Amazon called the regulations “burdensome,"
and noted that no other state has similar rules. It added that “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.”
The law has quickly turned into a political battle over the
opportunity to recoup billions through e-commerce taxes versus the impact
on an estimated 5,000 jobs in Colorado from Amazon’s counter-move. The affiliates,
many of them small, home-based operations, earn money by using their websites
and blogs to link customers to online retailers. Other online retailers such
as overstock.com are also protesting the move while local Colorado retailers
and many national retailers that pay sales taxes have long maintained that
online retailers have an unfair advantage. Several other states are also
considering internet tax proposals to shore up depleted budgets.
Some Democratic lawmakers, including Gov. Bill Ritter, accused
Amazon of “corporate bullying” for cutting off its affiliates. They argue
that Amazon will still be responsible for either collecting the taxes or
telling their customers to pay it. Some boycotts of Amazon have been launched.
“They’ve done nothing here but spit in our face,” Senate Majority
Leader John Morse said.
But many affiliates, as well as
Republican lawmakers, are seeking a repeal of the act.
“It’s exactly what we said would happen. They’re going to put
people out of work. It’s a game of chicken with people and their jobs, and
they lost,” said House Minority Leader Mike May, R-Parker.
Do you support e-commerce sites being tax-free or should e-tailers be
required to pay the same levies as physical store locations? What do
you think of Colorado’s "use tax" rather than a sales tax? What do you
make of Amazon’s response?
- Local affiliates here axed by Amazon.com
– The Colorado Statesman
- Amazon cuts off Colo. affiliates because
of tax – The Associated Press/Las Vegas Sun
- Amazon Hits Back at Colorado Web Sales
Tax – The Wall Street Journal