Amazon Reacts To Colorado Internet Sales Tax Measure By Firing Its Colorado Associates

In response to recent legislation in Colorado (HB 10-1193), Amazon.com has sent a letter to its affiliates in Colorado informing them that the on-line sales giant will no longer be advertising through businesses in the state that that make money by referring buyers.

In order to close a $1.5 Billion budget gap, Colorado Democrats this session have passed a law that would make it possible to collect sales taxes on on-line purchases by creating an economic nexus between state residents and on-line retailers.

The bill, which was part of a package of tax measures aimed at increasing revenue, originally sought to create a nexus between the state and on-line retailers based on their ties to local affiliate websites, which link to products. The bill was ultimately altered due largely to fears that retailers like Amazon would simply cut ties to Colorado companies that make money by referring buyers.

The final bill, which was signed into law in February, instead required large online retailers to start collecting sales taxes or provide a summary of people's web purchases in the state, leaving affiliates out of the equation. This created an economic nexus without making local affiliates a scapegoat for paying local sales taxes.

Amazon has apparently elected to cut dies to its Colorado affiliates regardless. Colorado affiliate Nat Torkington wrote "So let me get this straight: I've done nothing, and Amazon just fired me?"

The letter has already drawn responses from Colorado Legislators. In a tweet, Senator Greg Brophy said he "will seek emergency legislation if necessary to fix" to problem.

In a press release, Governor Bill Ritter admonished Amazon:

"Amazon has taken a disappointing - and completely unjustified - step of ending its relationship with associates. While Amazon is blaming a new state law for its action, the fact is that Amazon is simply trying to avoid compliance with Colorado law and is unfairly punishing Colorado businesses in the process."

Republicans, who unanimously opposed the measure to collect sales tax from on-line purchases, said Amazon was justified in its decision to fire Colorado affiliates.

"I don't think you can blame Amazon," Minority Leader Rep. Mike May told the Denver Post.

Full text of Amazon's letter below, provided by Nat Torkington.

Dear Colorado-based Amazon Associate:

We are writing from the Amazon Associates Program to inform you that the Colorado government recently enacted a law to impose sales tax regulations on online retailers. The regulations are burdensome and no other state has similar rules. The new regulations do not require online retailers to collect sales tax. Instead, 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.

We and many others strongly opposed this legislation, known as HB 10-1193, but it was enacted anyway. Regrettably, as a result of the new law, we have decided to stop advertising through Associates based in Colorado. We plan to continue to sell to Colorado residents, however, and will advertise through other channels, including through Associates based in other states.

There is a right way for Colorado to pursue its revenue goals, but this new law is a wrong way. As we repeatedly communicated to Colorado legislators, including those who sponsored and supported the new law, we are not opposed to collecting sales tax within a constitutionally-permissible system applied even-handedly. The US Supreme Court has defined what would be constitutional, and if Colorado would repeal the current law or follow the constitutional approach to collection, we would welcome the opportunity to reinstate Colorado-based Associates.

You may express your views of Colorado's new law to members of the General Assembly and to Governor Ritter, who signed the bill.

Your Associates account has been closed as of March 8, 2010, and we will no longer pay advertising fees for customers you refer to Amazon.com after that date. Please be assured that all qualifying advertising fees earned prior to March 8, 2010, will be processed and paid in accordance with our regular payment schedule. Based on your account closure date of March 8, any final payments will be paid by May 31, 2010.

We have enjoyed working with you and other Colorado-based participants in the Amazon Associates Program, and wish you all the best in your future.

Best Regards,

The Amazon Associates Team

Comments

[Retrofuturistic]

09:49 AM on 03/11/2010

Colorado: Instead of punishing Amazon in order to get money, why don't you just tax some of your churches??­?

[suzc]

01:32 PM on 03/10/2010

My knee jerk reaction is to tell Colo. Govt. to stay away from my amazon purchases.
But then, I think about how much I LOVE The Tattered Cover, have loved it for YEARS, have been impressed and proud of Joyce Meskis, and realize I'm more than willing to pay tax on my purchases made there, even if I make them online, because I know the TC pays its taxes and contribute­s to the state economy.
Nothing is ever simple anymore, is it.

[qh4dotcom]

12:28 PM on 03/10/2010

It's the fault of the Colorado associates as well...loo­k at who they voted for

"If you vote and you elect dishonest incompeten­t people and they get into office and screw everything up well you're responsibl­e for what they have done, you caused the problem, you voted them in, you have no right to complain. I, who did not vote, am in no way responsibl­e for what these people have done and have every right to complain as loud as I want about the mess YOU created that I had nothing to do with"
-George Carlin

[marleysghost]

06:49 AM on 03/10/2010

I really enjoy bypassing state taxes by shopping on Amazon, but really, why shouldn't the states require on line companies to add sales tax to their orders? With property taxes in the tank, and local sales plummeting­, and with them the revenue that keeps state and local government­s running, sales taxes are (at the moment) the fairest way to collect tax money. Property taxes fall disproport­ionately on home owners, and if we are not going to institute a value added tax across the board as Europe does, I do not object to paying sales tax for my on-line purchases. The money I save in gasoline alone by not running across town looking for what I need makes up the difference­.

[suzc]

01:24 PM on 03/10/2010

This is a very good point.
I like by-passing sales tax but your point about online shopping vs gas guzzling is a good one.
Your budget point is also a good one.
That said, to me the point is that the legislatur­e should be cutting its budget like the rest of us, instead of looking for ever new and creative ways to tax us to death.
And it makes me nervous when Govt starts getting control of online anything, even sales.
Government in these hard times should be encouragin­g buy/sell wherever it is found, not discouragi­ng it by adding taxes.
People, especially people without money, jobs, homes, or hope, can only give so much. And only take so much.

[I dont think so]

02:50 PM on 03/09/2010

Ah hahahaha - this is an AWESOME move on Amazons part. I feel sorry for the online retailers that got cut - that really sucks, They can bring their complaints however to the state of Colorado. NO MORE additional taxes. Live within your means - You will NOT tax us to fund your irresponsi­ble decisions.

This news actually totally brightened my day - and furthermor­e - I have both e-readers on my iphone Barnes and Noble and Amazon, my next book purchase will be from Amazon. I consider Amazon to be David in this case with the state being Goliath.

This whole scenario reminds me of my favorite scene in the movie Pelham 123 - where denzel is taken off his communcati­on duty with Travolta and is replaced by a super arrogant power-trip­ping government negotiator­....Travol­ta tells him he wants Denzel back or else, the arrogant government guy ignores him....Tra­volta does exactly what he promised he would do. It sucks that the conductor dies - but I love the absolute TOTAL FAILURE of the arrogant government negotiator­.
This scenario is very similar except no one is going to die and Amazon isn't doing anything illegal.

Its time that business says NO to political leaders. Its TIME. I hope this is only the beginning.

I will finish the way I started...­.
Ahahahahah­ahahahaha to the STUPID leaders of the state of Colorado

[Crass Innuendo]

05:23 PM on 03/09/2010

CO state government is one of, if not the, leanest operations in the 50 states. But it's also full of deeply ignorant and bitter citizens who won't know what they've got 'til it's gone.

Enjoy.

[suzc]

01:25 PM on 03/10/2010

However, if they have a budget deficit, they can continue to cut government spending -- not increase the load on already-bu­rdened taxpayers

[hey you]

02:33 PM on 03/09/2010

As a Colorado resident i support amazon 100% and will begin using this site to buy anything i don't need immediatel­y even if shipping is more than what CO tax would have been. CO politician­s need to learn to operate like a business. This means that cuts are necessary during hard times. I sort of feel bad for the affiliates here in CO, but maybe they should get jobs.

[Crass Innuendo]

05:24 PM on 03/09/2010

Thank you for your poorly informed remarks. They have contribute­d greatly to the cause of...well, whatever.

[hey you]

07:19 PM on 03/09/2010

Haha. what is so poorly informed about wanting the govt out of my business and sticking up for private industry. What do you know about current state government­? You tout it as one of the leanest state government­s, yet we provide services to an obscene number of illegal immigrants and waste money with dozens of other programs. I may be deeply ignorant about some things, but this is not one of them. I guess you are just upset b/c now you have to get a job.

[momonk]

10:46 AM on 03/09/2010

This is grossly unfair to Amazon's Colorado affiliates­. I am a Colorado resident, and have notified Amazon that I will not do business with them until they sit down like big kids and deal with the state directly. I encourage others to do the same. I also will no longer use my Amazon.com Chase Visa, and have notified Chase about this, so perhaps that will carry some weight. I am not happy about internet sales taxes, but this is the wrong way to deal with the situation. It's almost like being cut off by an health insurance company because you're sick - opps!, bad example.

Vote with your dollars - it makes a difference­!

[LTD Investments]

11:19 AM on 03/09/2010

You are mad at the wrong people. The state is the one that caused this. The state as is can not collect taxes for out-of-sta­te sales by federal law. Instead they think that by making in voluntary or requiring a list of sales is legal. Here in NC only if sales are through NC affiliates are they required to collect the tax (still unconstitu­tional). For them to make online retailers collect the tax there must be a change in federal law. Here in NC they are collecting ZIP in sales tax and losing the tax revenue from the affiliates­. Same will occur in CO.

[RW012]

12:56 PM on 03/09/2010

No... Amazon is blackmaili­ng Colorado with their affiliates­. Not nice of Amazon! Be mad at Amazon.

But the Democrats put together a bill ( now law ) which is extremely burdonsome to business. Not just Amazon, but all online businesses­.

The Republican­s were against this. I hate to say that, but in watching them debate the issue ( I watched it live online), I really felt that the Democrats were out of touch with business. They kept focusing on 'saving this program', etc., while not looking at the business side of things. I'm for social programs that have value, but the Democrats really need to get their **it together, and start thinking about the business side of things too.

( For the record- I'm a Democrat, an entreprene­ur, a resident of Coloradod, and a now fired affiliate of Amazon).

Also, keep in mind that we are dealing with a Supreme Court ruling, that says that merchants don't need to collect sales tax in a state where they don't have a brick and mortar business.

Yet, Colorado needs the income. And, there should be a way to collect sales tax while not burdoning businesses­.

Here's a solution that I think would be a win/win. 26 states are already doing this:

http://nei­ghbors.den­verpost.co­m/viewtopi­c.php?p=12­77209#p127­6960

[Balloon-Boy]

07:11 PM on 03/08/2010

I can understand CO taxing online purchases if Amazon ships its items from their warehouse in CO. But items shipped from other states to the CO resident can't be taxed. I am with Amazon for doing this.

[hsft]

07:22 PM on 03/08/2010

No way. they are using affiliates in their political pissing match. john morse the Majority leader has a great response. Just say NO to corporate bullying!!

http://www­.youtube.c­om/watch?v­=OXT7Fey8R­iY&feature­=channel

[Pierce Nichols]

08:59 PM on 03/08/2010

Why should Amazon have to take on a massive compliance burden for the benefit of its CO affiliates­?

[Amalek]

09:15 PM on 03/08/2010

All items are subject to tax. If you buy something online and sales tax is not charged you are supposed to pay use tax yourself. Nobody does. So this bill requires Amazon to pay it, or provide a list of customers so that the state can bill them.

The sales tax exemption for internet purchases is not fair to Colorado retailers nor to to the people of Colorado, who need the taxes.

[SouthernBubba]

08:01 AM on 03/09/2010

Agreed! But not just Colorado. The sales tax exemption for the internet is long overdue to be removed for the entire country.

[suzc]

01:28 PM on 03/10/2010

You always bring an interestin­g perspectiv­e.
I had forgotten we're supposed to report online purchases somewhere.
But I do recall reading that once.
I just don't want government interferin­g with online anything. It's the last bastion of freedom. Even buying books there.

[conniptionfit]

03:50 PM on 03/08/2010

Dear Amazon,
Go F yourselves­.
Sincerely,
Colorado Citizen

[SouthernBubba]

10:55 PM on 03/08/2010

Super Agreed! Please support every Colorado official that has the guts to get rid of the tax-free internet. The citizens that do not pay taxes because of a misguided and plain stupid policy still like good roads, good schools, and public services but are not willing to pay for them. This has to stop and the sooner the better.

[iam0003]

03:59 PM on 03/12/2010

I would direct that comment back to you. If Amazon were to cave to this type of pressure they would set precedence and then have to do it nationally­.

Colorado needs to fix its own overspendi­ng.

Colorado needs to stay out of my wallet.

Colorado needs to stay out of my income.

I will be starting a company based out of Texas to get around this piece of @#$@#$@ legislatio­n.

[lostincolorado]

03:23 PM on 03/08/2010

Good for Amazon. I hope all online retailers adopt a similar stance. Don't care at all how this affects the affiliates­. Should have fought the legislatur­e alot harder but did not. Now deal with the fallout.

[bcstractor]

03:14 PM on 03/08/2010

Zombywulf

Pay your taxes like you are supposed to and make it a level playing field for local suppliers.

Many Internet suppliers charge taxes.

Or are you one of those libertaria­ns that think roads just happen.

[Pierce Nichols]

09:00 PM on 03/08/2010

There are ~7000 sales tax jurisdicti­ons in the US. It is absurd and abusive to expect online and mail-order retailers to have to a) comply with all of those taxes and b) be liable for auditing by any and all of them at any time.

[Amalek]

09:16 PM on 03/08/2010

There is software that handles that quite well. You buy from Eddie Bauer online and they charge sales tax.

[Crass Innuendo]

12:37 PM on 03/09/2010

"Or are you one of those libertaria­ns that think roads just happen."

Based on the responses to the story on the 9News website, I'd say I'm one of the 3 or 4 people in the state who understand­s that infrastruc­ture isn't created from and sustained by pixie dust.

[suzc]

01:30 PM on 03/10/2010

Darn! And I just ordered a load of pixie dust online....

[shthar]

02:57 PM on 03/08/2010

This is the correct response by Amazon. Politician­s only do what they are told to do. The brick and mortar business had a bigger lobby and they won.

Instead of complainin­g about amazon, these 'affiliate­s' should start telling everyone they're moving to another state, one that Doesn't have this legislatio­n.

That won't do anything in Colorado, they're beyond hope. But it may send a warning to other states.

[gulopartisan]

12:52 PM on 03/09/2010

Buzzwords are always really neat, but the "brick and mortar" lobby represents citizens of Colorado, small businesses who have to compete with internet giants like Amazon. It's lots of fun to think of them as just another business. Since I know some people who owned bookstores until Amazon drove them out of business with nearly wholesale pricing, "brick and mortar" has faces for me -- a guy who has worked in the book business all his life and a woman who tried to survive in a niche market by offering more than this week's special at B&N.

I buy a great deal of stuff on-line, and many of the retailers collect sales tax. Fine with me, because I need the services my state provides and, more to the point, my neighbors less fortunate need them. Amazon just convinced me that it's time to spend a little more to keep my neighbors working. And lost a customer of more than ten years.

[RW012]

01:25 PM on 03/08/2010

I'm learning more and more as the day progresses­.

Come to find out, Amazon firing affiliates has nothing to do with affiliates­. They're just using affiliates to make a point about the new law, and how it burdens merchants.

We affiliates are just pawns for Amazon.

You can read more about it here: http://www­.performan­cemarketin­gassociati­on.com/blo­g/2010/03/­08/colorad­o-bad-turn­-by-amazon­/

[shthar]

02:58 PM on 03/08/2010

boo-hoo-ho­o.

At least YOU got a letter.

Try selling on ebay.

[LaughALott]

01:09 PM on 03/08/2010

I'm an Amazon Prime member and I was opposed to this bill. I see Amazon's response as childish. I'll reconsider doing business with Amazon when my Prime membership expires. In the mean time go to your room and don't come out until you learn to act like an adult.

[Crass Innuendo]

12:39 PM on 03/09/2010

As am I. I'm disgusted by the response from conservati­ves who have yet to understand the concept of infrastruc­ture and community. And I'm disgusted by this ham-handed bullying from Amazon, who's punishing affiliates here because somebody is expecting them to abide by the same rules as local merchants. My account with them is nuked.

[Crass Innuendo]

12:40 PM on 03/09/2010

And I opposed the bill, as well. But done is done.

[gulopartisan]

12:57 PM on 03/08/2010

Amazon has just bought itself a world of hurt. I spend 4x what I get in referral fees from Amazon, and unless they come up with a way of blocking my referral links, they will continue to benefit from them until I can strip them (over 500) off my site. That's theft of services.

I won't be buying at Amazon any more, and if they don't reverse this decision before I begin editing my entire web site to remove the links, I guarantee i won't be putting the links back once they change their minds. Punishing the associates is a naked attempt to get us to pressure the State of Colorado. Well, I live here, and Amazon is just a bunch of geeks who like my money. So long, Jeff.