Amazon cancels affiliates

rhadin · 07-02-2009, 09:24 AM

It was reported in the past couple of days that Amazon has decided to terminate affiliate agreements with affiliates in Rhode Island and (I think the second was) North Carolina because of the sales tax issue. The same article indicated that Amazon is not accepting affiliates in Hawaii over the same issue and that Amazon has threatened to drop affiliates in additional states if those states require Amazon to collect sales taxes like resident businesses of those states do.

Interestingly, however, Amazon threatened but then changed its mind about dropping affiliates in New York over the same issue.

It's always good to see Amazon doing its best for for those who helped it become so successful.

Makes me want to rush out and buy from Amazon.

Moejoe · 07-02-2009, 09:32 AM

Quote:

Originally Posted by rhadin

It was reported in the past couple of days that Amazon has decided to terminate affiliate agreements with affiliates in Rhode Island and (I think the second was) North Carolina because of the sales tax issue. The same article indicated that Amazon is not accepting affiliates in Hawaii over the same issue and that Amazon has threatened to drop affiliates in additional states if those states require Amazon to collect sales taxes like resident businesses of those states do.

Interestingly, however, Amazon threatened but then changed its mind about dropping affiliates in New York over the same issue.

It's always good to see Amazon doing its best for for those who helped it become so successful.

Makes me want to rush out and buy from Amazon.

What is going on with that company? Within the space of a year they've gone from the first place I'd shop for many different products, to the very last place I'd bother with. Every new announcement and news item from them seems like it's geared towards annoying and alienating as many people as possible.

poohbear_nc · 07-02-2009, 09:50 AM

As a NC resident, let me try to clarify the sales tax situation here for retail sales, and why Amazon doesn't want to deal with it. About a year ago, to speed up payment of sales tax revenues to the state, NC passed a revision to its Sales & Use Tax regulations: Companies with retail sales, which formerly transmitted sales tax collected to the state once or twice a month, now have to PREPAY sales tax for the upcoming month. In other words, you have to prepay sales tax on sales you haven't made yet - kind of govenment financial time travel extortion. How this works:
You collected $10,000.00 in sales tax on retail sales done in June. You send that in after your June business month is over. You then also have to prepay at least 65% of that amount for July sales that haven't occurred yet! Another $6500.00 to the state. Once this cycle started, NC was able to pre-collect on sales that hadn't occurred. Don't ask me why this is legal, but it is in force.
This may be the reason Amazon is dropping states - that have these wacko schemes for collecting sales tax. Too much trouble for the amount of business from its affiliates?

RickyMaveety · 07-02-2009, 10:48 AM

Quote:

Originally Posted by poohbear_nc

As a NC resident, let me try to clarify the sales tax situation here for retail sales, and why Amazon doesn't want to deal with it. About a year ago, to speed up payment of sales tax revenues to the state, NC passed a revision to its Sales & Use Tax regulations: Companies with retail sales, which formerly transmitted sales tax collected to the state once or twice a month, now have to PREPAY sales tax for the upcoming month. In other words, you have to prepay sales tax on sales you haven't made yet - kind of govenment financial time travel extortion. How this works:
You collected $10,000.00 in sales tax on retail sales done in June. You send that in after your June business month is over. You then also have to prepay at least 65% of that amount for July sales that haven't occurred yet! Another $6500.00 to the state. Once this cycle started, NC was able to pre-collect on sales that hadn't occurred. Don't ask me why this is legal, but it is in force.
This may be the reason Amazon is dropping states - that have these wacko schemes for collecting sales tax. Too much trouble for the amount of business from its affiliates?

Nah, it's legal, stupid, but legal. Makes about as much sense as making people pay income tax quarterly based on last year's income. If you don't make as much, sure they refund the excess, but meanwhile, they've had the use of your money, and they don't pay you any interest for the period of time they've had it .... which is just wrong on so many levels.

JSWolf · 07-02-2009, 10:51 AM

Remond me never to start a business in North Carolina.

Phogg · 07-02-2009, 10:56 AM

Quote:

Originally Posted by poohbear_nc

As a NC resident, let me try to clarify the sales tax situation here for retail sales, and why Amazon doesn't want to deal with it. About a year ago, to speed up payment of sales tax revenues to the state, NC passed a revision to its Sales & Use Tax regulations: Companies with retail sales, which formerly transmitted sales tax collected to the state once or twice a month, now have to PREPAY sales tax for the upcoming month. In other words, you have to prepay sales tax on sales you haven't made yet - kind of govenment financial time travel extortion. How this works:
You collected $10,000.00 in sales tax on retail sales done in June. You send that in after your June business month is over. You then also have to prepay at least 65% of that amount for July sales that haven't occurred yet! Another $6500.00 to the state. Once this cycle started, NC was able to pre-collect on sales that hadn't occurred. Don't ask me why this is legal, but it is in force.
This may be the reason Amazon is dropping states - that have these wacko schemes for collecting sales tax. Too much trouble for the amount of business from its affiliates?

I rather imagine it is not just Amazon droping these states.
And the podunk legislature is likely too inbred to realize tha the businesses who cease doing business do not all get replacements stepping in. So after the initial revenue surge there will be an overal net loss.

Shaggy · 07-02-2009, 11:01 AM

Amazon isn't necessarily in the wrong here. This is mostly a move by the states to grab more tax revenue. Traditionally, a brick and mortar store is not required to charge sales tax if they do not have a physical presence in the state. IE, if Amazon's offices are located in state A, and I'm in state B, then Amazon is not required to charge sales tax on behalf of state B when I place an order.

What a couple of states are trying to do, however, is say that if an affiliate is located in their state, and you click on a link at that affiliate's website that takes you to Amazon, then Amazon has to pay them sales tax. They're saying that a web link from an affiliate in that state is the same as Amazon having a physical presence in the state, which is pretty far fetched.

Amazon pulling the affiliates is a little extreme, but what they're trying to do is force those companies to complain to their local state representatives to stop the proposed law from going through.

poohbear_nc · 07-02-2009, 11:36 AM

Quote:

Originally Posted by Shaggy

Amazon isn't necessarily in the wrong here. This is mostly a move by the states to grab more tax revenue. Traditionally, a brick and mortar store is not required to charge sales tax if they do not have a physical presence in the state. IE, if Amazon's offices are located in state A, and I'm in state B, then Amazon is not required to charge sales tax on behalf of state B when I place an order.

What a couple of states are trying to do, however, is say that if an affiliate is located in their state, and you click on a link at that affiliate's website that takes you to Amazon, then Amazon has to pay them sales tax. They're saying that a web link from an affiliate in that state is the same as Amazon having a physical presence in the state, which is pretty far fetched.

Amazon pulling the affiliates is a little extreme, but what they're trying to do is force those companies to complain to their local state representatives to stop the proposed law from going through.

Especially since the link is really located in whatever state the ISP hosting the website is located. Geographically speaking.

Elsi · 07-02-2009, 11:58 AM

Reminds me of an attempt (circa 1989 if memory serves) by the Florida legislature to tax a company located in the state based not on their revenue from Florida, not on their revenue in the USA, but on the World Wide revenue across all divisions. That's akin to your income tax being based not on your own income, but that of your entire extended family.

doreenjoy · 07-02-2009, 12:05 PM

The Rhode Island issue is slightly different. I've attached an article on it courtesy of my CPA. Sorry I don't have time to give an abstract.

texasnightowl · 07-02-2009, 12:08 PM

Another NC resident here...I don't blame Amazon one bit for cutting the affiliates...I'd do the same.

basschick · 07-02-2009, 12:14 PM

seems to me that the states' plan to get extra money from internet and mail order affiliates may backfire and bring them even less revenue. after all, the affiliates were already paying taxes to the state - those taxes will be much less if businesses find it a financial / tax problem to do business with people in those states.

poohbear_nc · 07-02-2009, 12:16 PM

Here's a link to a recent article, explaining in more detail Shaggy's post above.

http://tech.yahoo.com/blogs/null/145565

koland · 07-02-2009, 12:19 PM

Also, the way the law was written for affiliates, the person doing the purchasing didn't pay the tax, the affiliate did (who cares if it was more than they actually were paid). Otherwise, when you placed an order, you would have random amounts of sales tax charged, depending on the last link you clicked. If they just required charging of their states tax (and no local tax - that gets into nearly impossible for mail order places, due to crazy tax laws) for sales delivered to that state due to one or more affiliates being located in the state, Amazon might cave (especially since most other places get caught on this). It does put them in a position where mail order catalog come out ahead again (specifically exempted from this type of end-run at the federal level). Trying to track the sales based on the state where the affilate is located isn't difficult (they do it now), but collecting taxes on it would be a killer, either for the affiliates or on the customer (who would find a way to click someone from a state w/ no sales tax).

doreenjoy · 07-02-2009, 12:21 PM

As long as the states don't start taxing downloads, my company will be OK. Right now taxes are based on physical goods. If they start taxing downloads, a lot of e-publishing companies will suffer.

07-02-2009, 09:24 AM	#1
rhadin Literacy = Understanding Posts: 4,833 Karma: 59674358 Join Date: Dec 2007 Location: The World of Books Device: Nook, Nook Tablet	Amazon cancels affiliates It was reported in the past couple of days that Amazon has decided to terminate affiliate agreements with affiliates in Rhode Island and (I think the second was) North Carolina because of the sales tax issue. The same article indicated that Amazon is not accepting affiliates in Hawaii over the same issue and that Amazon has threatened to drop affiliates in additional states if those states require Amazon to collect sales taxes like resident businesses of those states do. Interestingly, however, Amazon threatened but then changed its mind about dropping affiliates in New York over the same issue. It's always good to see Amazon doing its best for for those who helped it become so successful. Makes me want to rush out and buy from Amazon.

Similar Threads
Thread	Thread Starter	Forum	Replies	Last Post
Would it be possible for Amazon to re-compile Amazon Reader App for Pocketbook OS dev	brecklundin	PocketBook	3	09-22-2010 08:04 PM
Plastic Logic delays Que launch indefinitely and cancels pre-orders	davidspitzer	News	49	06-29-2010 11:15 AM
Gizmodo: Microsoft Cancels Courier	kjk	General Discussions	7	05-01-2010 11:11 AM
HP cancels its Win 7 slate	ekaser	News	1	04-30-2010 11:50 AM
Load amazon books onto a 700? and back to amazon?	Douglasco	Sony Reader	12	02-22-2009 11:54 PM

07-02-2009, 09:50 AM	#3
poohbear_nc Now what? Posts: 58,839 Karma: 135181808 Join Date: Feb 2009 Location: Durham, NC Device: Every Kindle Ever Made & To Be Made!	As a NC resident, let me try to clarify the sales tax situation here for retail sales, and why Amazon doesn't want to deal with it. About a year ago, to speed up payment of sales tax revenues to the state, NC passed a revision to its Sales & Use Tax regulations: Companies with retail sales, which formerly transmitted sales tax collected to the state once or twice a month, now have to PREPAY sales tax for the upcoming month. In other words, you have to prepay sales tax on sales you haven't made yet - kind of govenment financial time travel extortion. How this works: You collected $10,000.00 in sales tax on retail sales done in June. You send that in after your June business month is over. You then also have to prepay at least 65% of that amount for July sales that haven't occurred yet! Another $6500.00 to the state. Once this cycle started, NC was able to pre-collect on sales that hadn't occurred. Don't ask me why this is legal, but it is in force. This may be the reason Amazon is dropping states - that have these wacko schemes for collecting sales tax. Too much trouble for the amount of business from its affiliates?

07-02-2009, 10:51 AM	#5
JSWolf Resident Curmudgeon Posts: 73,954 Karma: 128903250 Join Date: Nov 2006 Location: Roslindale, Massachusetts Device: Kobo Libra 2, Kobo Aura H2O, PRS-650, PRS-T1, nook STR, PW3	Remond me never to start a business in North Carolina.

07-02-2009, 11:01 AM	#7
Shaggy Wizard Posts: 4,293 Karma: 529619 Join Date: May 2007 Device: iRex iLiad, DR800SG	Amazon isn't necessarily in the wrong here. This is mostly a move by the states to grab more tax revenue. Traditionally, a brick and mortar store is not required to charge sales tax if they do not have a physical presence in the state. IE, if Amazon's offices are located in state A, and I'm in state B, then Amazon is not required to charge sales tax on behalf of state B when I place an order. What a couple of states are trying to do, however, is say that if an affiliate is located in their state, and you click on a link at that affiliate's website that takes you to Amazon, then Amazon has to pay them sales tax. They're saying that a web link from an affiliate in that state is the same as Amazon having a physical presence in the state, which is pretty far fetched. Amazon pulling the affiliates is a little extreme, but what they're trying to do is force those companies to complain to their local state representatives to stop the proposed law from going through.

07-02-2009, 11:58 AM	#9
Elsi Wizard Posts: 2,366 Karma: 12000 Join Date: Jan 2008 Location: Texas, USA Device: Kindle; Sony PRS 505; Blackberry 8700C	Reminds me of an attempt (circa 1989 if memory serves) by the Florida legislature to tax a company located in the state based not on their revenue from Florida, not on their revenue in the USA, but on the World Wide revenue across all divisions. That's akin to your income tax being based not on your own income, but that of your entire extended family.

07-02-2009, 12:08 PM	#11
texasnightowl Guru Posts: 699 Karma: 1001556 Join Date: Jul 2008 Location: Texas Device: Oasis 3, K4B(NT), K3/KK	Another NC resident here...I don't blame Amazon one bit for cutting the affiliates...I'd do the same.

07-02-2009, 12:14 PM	#12
basschick Wizard Posts: 1,096 Karma: 4695691 Join Date: May 2008 Device: Kindle Paperwhite	seems to me that the states' plan to get extra money from internet and mail order affiliates may backfire and bring them even less revenue. after all, the affiliates were already paying taxes to the state - those taxes will be much less if businesses find it a financial / tax problem to do business with people in those states.

07-02-2009, 12:16 PM	#13
poohbear_nc Now what? Posts: 58,839 Karma: 135181808 Join Date: Feb 2009 Location: Durham, NC Device: Every Kindle Ever Made & To Be Made!	Here's a link to a recent article, explaining in more detail Shaggy's post above. http://tech.yahoo.com/blogs/null/145565

07-02-2009, 12:19 PM	#14
koland Grand Sorcerer Posts: 8,560 Karma: 8033155 Join Date: Aug 2008 Location: TN, USA Device: kindle(all), nook, nookcolor, Sony, Kobo, epic, iphone, iPad, pc	Also, the way the law was written for affiliates, the person doing the purchasing didn't pay the tax, the affiliate did (who cares if it was more than they actually were paid). Otherwise, when you placed an order, you would have random amounts of sales tax charged, depending on the last link you clicked. If they just required charging of their states tax (and no local tax - that gets into nearly impossible for mail order places, due to crazy tax laws) for sales delivered to that state due to one or more affiliates being located in the state, Amazon might cave (especially since most other places get caught on this). It does put them in a position where mail order catalog come out ahead again (specifically exempted from this type of end-run at the federal level). Trying to track the sales based on the state where the affilate is located isn't difficult (they do it now), but collecting taxes on it would be a killer, either for the affiliates or on the customer (who would find a way to click someone from a state w/ no sales tax).

07-02-2009, 12:21 PM	#15
doreenjoy 01000100 01001010 Posts: 1,889 Karma: 2400000 Join Date: Mar 2009 Device: Polyamorous	As long as the states don't start taxing downloads, my company will be OK. Right now taxes are based on physical goods. If they start taxing downloads, a lot of e-publishing companies will suffer.

Advert

Advert