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Stop Colorado Affiliate Tax

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    Amazon vs Colorado – I Got Fired Today as an Amazon Affiliate

    Colorado HB 1193: A Lose – Lose Law

    I reported back in February that Colorado HB 10-1193 was going to be worse than a “Google Slap” to Colorado online affiliate marketers.  I also pointed out that even though the law had not been voted on at the time, affiliate programs were already dropping me from their ranks…

    I even posted one of the emails that I had received that day from the Drs. Foster and Smith Affiliate Program… Well, the law has now gone into affect as of the first of March…  First thing this morning, I received an email from Amazon’s Associates Program.  They fired me!   Here’s what the email stated:

     

     

    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

    This bill was part of a package of tax measures

    HB 10-1193 was part of a package of tax measures that were aimed at making up deficits in the state’s budget.  The bill originally tried to make affiliate marketers in Colorado part of a nexus that represented out of state companies physically within Colorado for sales tax purposes.

    After write-in campaigns and demonstrations at the state capital, the bill was altered on the fears that retailers like Amazon.com would simply sever ties with the state’s affiliates and this would hurt the sales tax revenues by these retailers making less sales.

    Well, as you can see by the above email from Amazon, they have elected to fire their affiliates within the state of Colorado… In other words, anyone living in Colorado and making revenue through the Amazon Associates program has been shut down… Just as they have done in other states that have enacted such laws…

    You have to admire Amazon for taking a stance against Colorado for enacting a law that requires them to provide data on what individual Colorado residents spend each year in order that the state can collect sales tax on their online purchases…

    But by taking this stance, Amazon has let go of the people that have been making money through them… especially hard hit are those marketers that centered their business model around Amazon…

    Amazon has said that they are still willing to sell to Coloradoans and ship to our state, so it’s only the affiliate marketers that are being punished… only those that have been making a few extra dollars to prop up their own sagging budgets.

    So Far, Only Companies Marketing Through Affiliate Networks Have Cut Me Off

    One observation that I have made over this whole ordeal is that the affiliate programs that have suspended my accounts, other than Amazon, have been associated with affiliate networks like CJ, LinkShare and others.

    Maybe this is because they think it will be easier for the Colorado State Dept. of Revenue to keep tabs on them and enforce the sales revenue reporting that they will be require to provide on each resident…

    These companies, like Amazon, pay low commission and to make a living through them, you need to make massive sales of high dollar items to make a good affiliate commission.  I prefer companies that pay out higher commissions, so my revenue won’t be hurt that much… but every penny counts…

    Hopefully, the state legislators will see that they are cutting their own throats on this tax thing… On the one side, they may not gain as much sales tax revenue as they were expecting… And, on the other side, they will have decreased income tax revenue that was supplied through the affiliate marketers that they have seen fit to punish…


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    Posted: March 8th, 2010 under Marketing Rants.
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