Amazon Ends Aff Program in North Carolina

[matted]

I wanted to post a "local" news story for me - just to show that the gambling industry isn't the only one under attack.

http://news.yahoo.com/s/ap/20090627/...mazon_nc_taxes

RALEIGH, N.C. – Amazon.com said Friday it has pulled the plug on commissions for North Carolina Web sites that make referrals to the online retailer because a law designed to collect sales taxes on these transactions could soon be enacted.
Seattle-based Amazon said it wrote to Web site operators, telling them its "Associates program" will end after Friday. Web sites that posted links to the company about its products have received up to a 15 percent cut on sales.

Basically, the state legislature was working on a bill that would have forced Amazon to collect 6.75% sales tax from state residents as it would have made these agreements akin to operating a physical store. In the majority of the US, sales tax doesn't cross state lines, provided the company lacks operations in the state.... are affiliates considered extensions of the company?

It is an interesting issue - and in my opinion, really highlights how outdated tax issues are. In this case, stores that have to charge sales tax are more expensive than those that do not - and the state doesn't get their sales tax...

And as a result of the dispute, legitimate business are essentially shut down.

[matted]

And, just saw this followup article...

http://tech.yahoo.com/news/ap/200907...ne_sales_taxes

Not very well written, as there doesn't seem to be any kind of conclusion (and no stats to speak of to back up the point of the article)... but I like this quote:

Increasingly, states aching under the weight of the recession are seeking a way around that rule. Because companies like Amazon.com Inc. get help drumming up sales from online affiliates — people who link to products on their blogs, promote Web shopping deals and offer coupons — several states say the Internet retailers should charge sales taxes in states where those affiliates are based.


The financial benefits may not be quite what the states anticipate, though. Rather than gearing up to collect taxes, Amazon and other Web retailers are simply shutting down their affiliate marketing programs. As the small businesses that participate in these programs get cut off, a state could lose tax revenue rather than add to it.

What they dont specify is that the tax revenue from the small business is primarily paid to the federal tax collector - the state gets a much smaller percentage.

[AmCan]

what great state tax policy: you can't force amazon to pay sales tax on sales to your state's residents, unless they were referred by a resident of the state. what a great way for amazon to screw affiliates who built their businesses around them, saves commissions and they still don't pay taxes. Amazon owes some cash to some politicians for increasing their profit margins.

amazon has repeatedly tightened their terms to reduce the commissions they pay out and especially to kill off small affiliates.

[bb1web]

I thought the whole idea behind not charging tax on line was to boost the net economy and make it able to compete with real stores ie the final cost to the consumer being

no tax + shipping + product = tax + no shipping cost + product

final outcome ... both entities can compete. Without cutting out taxes .. the shipping charges will tilt the balance in most cases to real life stores.

once again real smart thinking. Set everything up so that people and businesses build their model around the status quo .. and then change it all on them.

Man I hate whoever is in charge of common sense on this planet.