Colorado amazon affiliate ban workaround

I went to sign up as an amazon affiliate and found out that Rhode Island, Colorado, and North Carolina are not allowed to participate in the program because of tax issues with amazon.

More details here:

http://bit.ly/9ZV4eq

I've come up with two ideas for workarounds:

1) Use your name, but an address of a friend in another state. You'd probably have to create a new account with amazon, but I don't see how they'd be able to link the two, since people often share the same names.

2) Use a person in another state (that isn't using the program) and pay them a cut of the profit.

I'd personally prefer option one, but I want to make sure I'm not overlooking any obvious issues.

Thoughts?

This is all good and well until you get to the issue of SSN.

Option 1, your friend will end up paying taxes on phantom income so it he was smart, he would want about 30-40% just to cover taxes and I would want at least half of the rest to cover potential problems. It would probably be better to set up some formal business relationship and have the business pay the taxes. That way you have some legal back up to fall back upon.

Option 2, see above.

But then again, I am not a tax lawyer nor do I play one on T.V.

I wouldn't get your friends/family involved in this. What I would do is set up an LLC in a state that's not subject to sales tax, such as DE, and I would get an EIN for the LLC. Also, make sure that the LLC's "principal place of business" is in DE. As a precaution, once you have everything set up, you might want to log in to Amazon using only IP addresses based in DE.

</notlegaladvice>

Join Skimlinks! :O

(Also hi everyone this is my first post here~ I was about to start my own thread but I started browsing around first and what do you know, I found something I can provide an answer to!)

Anyway I have definitely heard that tons of people are joining Skimlinks as a workaround for their state being banned from Amazon. Skimlinks is pretty awesome all around - after they accept you (occurred in under 24 hours for me, but the site I indicated as my main one is totally white-hat), you're immediately and automatically accepted to every single merchant they are partnered with (17,962 of them at last count). o_o

I am really reeeaally tempted to leave an optional ref here, but I feel like that would be in incredibly poor taste, what with this being my very first post and all. I don't want to sound like I'm just mindlessly promoting Skimlinks for the referrels. D: I say good things about them because they actually are awesome. ;~;

Looks like this thread is pretty dead. But just in case any experts are still around. What if you had your friend sign up in their state and every time they sent you money they claim it on their taxes as a business expense? For example: your site makes $500 from amazon in 1 quarter and that money goes to your friend. That friend then claims, say, $475 in 'web development' expenses in that quarter (which he/she sends to you). So come tax time their profits - and taxable liability - are close to nil. Meh?