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Looming Internet Sales Tax Prompts Amazon Threat to Cut Off Affiliates

Discussion in 'Affiliate Programs' started by CyberDilemma, Mar 5, 2011.

  1. CyberDilemma

    CyberDilemma Regular Member

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    California's pending legislation to collect sales tax from Amazon.com has prompted the online retailer to threaten cutting loose its affiliates. Now several retailers -- Barnes & Noble, Sears and Walmart -- are trying to get Amazon affiliates to jump ship and replace that revenue with links to other retailers, making it harder for consumers to find links to products on Amazon.

    The issue of collecting internet sales tax from goods sold online is contentious, complicated and ongoing. Basically, most states don't require online-only retailers collect sales tax. Only retailers with a physical presence in that state do so. The states may require consumers to pay on their own, but few actually pursue it. So a retailer with stores across the country, like Sears, must collect state sales tax for online orders, while Amazon shoppers get off tax free, with a few exceptions.

    But as states face looming budget problems and seek new revenue, laws about taxing online sales are being considered. As one of the states in the worst financial shape, California is looking to do just that. And in an effort to delay the measure and give up billions in revenue, Amazon is trying to use whatever leverage it has.

    In Texas, where Amazon has a distribution center, the state presented the company with a $269 million tax bill. The retailer is appealing, but has said it would close the facility and lay off the employees. Other states collect taxes based on whether Amazon has affiliates or associates based there. These are sites that advertise Amazon.com and direct traffic to Amazon.

    If California, or any other state for that matter, passes a law that requires Amazon to collect taxes because it has affiliates based there, Amazon says it would drop those affiliates (all of which get paid by Amazon and, in turn, pay state taxes).

    It's these affiliates that are now in play. Barnes & Noble, Sears and Walmart issued open invitations to Amazon affiliates, rolling out a cyber welcome mat for the many sites that direct traffic to Amazon.com. So if you're searching for a good price on something and are used to following links or banner ads to Amazon, you may have to instead go directly to Amazon.

    Perhaps more importantly, the states efforts may lead to us paying taxes on Internet purchases. At least that's what Amazon believes, calling the legislation unconstitutional and a "Trojan horse" in a letter to California Sen. George Runner.

    article source: http://www.walletpop.com/2011/03/04/looming-internet-sales-tax-prompts-amazon-threat-to-cut-off-aff/
     
  2. BorisTipsIt

    BorisTipsIt Regular Member

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    Here's a link to the letter Amazon sent to CA.
     
  3. flibbertigibbet

    flibbertigibbet Regular Member

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    If you're having trouble with the pdf, you can quickview it here:
    Code:
    http://docs.google.com/viewer?a=v&q=cache:0T2UxNYPyP0J:www.boe.ca.gov/members/runner/newsreleases/Amazon_Letter_to_Senator_Runner.pdf+amazon+letter+to+senator+runner&hl=en&gl=us&pid=bl&srcid=ADGEEShyXoYo-t1tKxEo-2EV6TLf3K-CWanuA_seuequgf0JRTCa5x2Y3rJE7N9GII-1vktEQGT0BimeljHbpmVl9FofbMZEf8biIeW7hG7kToU7MQbBWOIqjcJF19-kItMPJiX0RoZG&sig=AHIEtbQ9QZuWDQxe0GFwTGhAE53ROy0ieQ
     
    Last edited: Mar 8, 2011
  4. flibbertigibbet

    flibbertigibbet Regular Member

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    I'm glad I'm not in california. ;)
     
  5. SecretMoney

    SecretMoney Regular Member

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    ok I will check your link soon
     
  6. MrSmith

    MrSmith Newbie

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    Hope amazon smashes the Cali govt. Stupid officials
     
  7. lacy1978

    lacy1978 Junior Member

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    This law was passed in IL this week. Amazon dropped all affiliates residing here...
     
  8. tony23

    tony23 Regular Member

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    So does this law affect international affiliates?
     
  9. -Jericho-

    -Jericho- Jr. Executive VIP Jr. VIP Premium Member

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    I'm glad I left CA. The government there just refuses to stop destroying the economy. They want to milk every last penny out of everybody. I had to close my offline business there because they destroyed it.
     
  10. Barnaby

    Barnaby Newbie

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    Just read this - it's damnably crazy! Glad I don't live in Illinois, but I'm sure this will be coming to my 'friendly neighborhood' state legislature soon enough. :(
     
  11. ``Yousef

    ``Yousef Power Member

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    I read an article on Forbes the other day which was suggesting that, bluntly, Amazon's game is getting shat on by imposition of new sales tax laws in the U.S.

    I suppose that's what you get for being a company that makes pennies on the dollar, and barely has any sway on it's margins whatsoever. That's how it is in retail, but even more so when you're giving affiliates/associates a cut of the very little slice of pie you do have in the first place.

    My real questions is, how are they going to regulate taxes based on affiliates within a state? Would you pay the sales tax on the profits generated directly through affiliates within those states, to each state, your own state sales tax, and then federal income tax?
     
  12. Hollywood007

    Hollywood007 Registered Member

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    Wow this is crazy.

    With the amount of cash Cali generates from medical marijuana alone they should never be cash strapped
     
  13. sixsevenx

    sixsevenx Newbie

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    Amazon cut off Colorado Affiliates last year. Soon they'll just cut off the entire US