Amazon Cuts Off All North Carolina Affiliates Over Questionable Proposed Tax Bill

from the tax-amazon dept

Fri, Jun 26th 2009 4:56pm — Mike Masnick

You may remember last year -- when New York passed an ill-considered law that attempted to twist the interpretation of its tax law to make Amazon responsible for collecting sales tax in NY because some affiliates were based there. This is problematic, because it basically defines an affiliate as an employee of the company, when an affiliate is really just an advertiser. In response, Amazon went to court, but another retailer, Overstock, went the more drastic (and press friendly) route, and cut off all NY affiliates. I guess Amazon was kicking itself for not thinking of the same thing, and now that a similar issue is showing up in North Carolina, Amazon has abruptly cut off all affiliates in the state, leading to anger among many of those affiliates. The question is whether they turn that anger against Amazon or the state government for pushing forward with such a law.

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Filed Under: affiliates, north carolina, taxes
Companies: amazon

24 Comments

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Anonymous Coward, 26 Jun 2009 @ 6:42pm

Here is my opinion: As an affiliate, I am selling performance pays advertising space. I don't sell any products, I don't charge the client, I don't handle the products, and I don't in any way shape or form control any part of the business. The transaction for sale is entirely between (in this case) Amazon and their customer. Amazon only pays me performance based income for advertising space that I provide. I have no more control over a sale than a magazine does, based on the ad pages in their publication.

So the tax man in any state has nothing to do or say to me. I am not an employee of Amazon, nor do I operate an amazon office. I sell ad space.
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Joe, 26 Jun 2009 @ 6:56pm

Thanks Bev
I live in NC and I fully support Amazon on this. Our fearless leaders continue to punish consumers and business owners for their own incompetence.

Bev Purdue, govenor of NC since January...
Began using Education Lottery money to fund non-education related programs.
Raised tobacco tax, NCs #1 cash crop, a full $1 higher than the recent federal requirement.

Can you get anymore out of touch with your constituants?
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scarr, 26 Jun 2009 @ 9:48pm

This seems monstrously stupid. Unless it's infinitely easy to handle the state taxes, companies are going to pull out of your state. In the age of technology, many sales can be handled remotely. This means a loss of jobs and income to your state.

If the legislature assumes that not having people in the state means they won't sell ads to businesses in the state, doesn't that mean the businesses in your state will lose potential customers, and thus income (and thus more sales and income tax) too?

I know they want to collect the money they really should be receiving, but this poorly thought out approach is like shooting yourself in the foot, then in the other foot.
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Bradley Stewart, 27 Jun 2009 @ 6:10am

I'm Know Expert On Tax Law
but I have to say that things have gotten way out of hand as far as taxes are going. Not very long ago I watched a story on television about a daughter following her father's car home in her car. Something wrong and she wound up rear ending her father. Aside from the expense of the auto repairs and the probability of an insurance increase some time later one of the two of them received a ticket from the State. As I recall it was for 237 dollars. thats right. 237 dollars. What you might ask for? It was a Crash Tax.
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- btr1701 (profile), 27 Jun 2009 @ 6:57am
  
  Re: I'm Know Expert On Tax Law
  > I'm Know Expert On Tax Law
  
  Or the English language, apparently.
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- Anonymous Coward, 29 Jun 2009 @ 5:06am
  
  Re: I'm Know Expert On Tax Law
  What for? It's a fine for being stupid and endangering the public. i.e. Fine for "failure to maintain control of your vehicle". Just because it happens to be father/daughter relationship in this instance doesn't change the law.
  WTH is your point?
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ahrcanum, 27 Jun 2009 @ 12:01pm

taxes
Won't be long before a federal internet sales tax anyways.
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- Anonymous Coward, 27 Jun 2009 @ 12:27pm
  
  Re: taxes
  I was thinking that and such a tax should be resisted. We don't need more federal control we need less.
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Anonymous Coward, 27 Jun 2009 @ 11:38pm

doh!
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Bob, 28 Jun 2009 @ 7:18am

paying attention now?
Republicans = Lower taxes, smaller gov, less gov intrusion in our lives, more personal responsibility, FREE MARKET, MORE FREEDOM.

Democrats = Higher taxes, new taxes, more taxes, GIANT GOVERNMENT, more gov intrusion in our lives, personal responsibility out the window as you must be a victim of something so lets create a tax and throw money at it, forget the free market lets try Marxism or better yet Fascism! Freedom? We know whats better for you than you do.
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- Jonk, 28 Jun 2009 @ 4:55pm
  
  Re: paying attention now?
  @bob. Simplistic fool.
  [ link to this | view in chronology ]
- Anonymous Coward, 28 Jun 2009 @ 10:40pm
  
  Re: paying attention now?
  No, Republicans = fewer laws and free markets to the extent that it helps the rich and powerful. To the extent that more laws can help rich special interest groups at the expense of society then more laws and restrictions are needed.
  
  If Republicans were really about free markets why are they in favor of Intellectual property? That's a form of government restriction, against free markets, often in favor of special interest groups at the cost of society.
  
  Not to mention wire tapping and such by the Bush administration. Less government intrusion? I think not.
  
  Also, I'm not defending democrats either.
  
  I think Ron Paul would make a good president. He really believes in less federal government control and more individual freedoms.
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- Anonymous Coward, 28 Jun 2009 @ 10:44pm
  
  Re: paying attention now?
  and if Republicans are so less govt intrusion why are they so pro unnecessary wars (ie: the war in Iraq)? That's more pro government intrusion.
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- ASTROBOY, 29 Jun 2009 @ 6:21am
  
  Re: paying attention now?
  Unfortunately Republicans also = busting up unions, starting wars we dont want, censorship, catering to big business at the expense of individuals and lots of power to law enforcement and federal cops.
  
  And both parties = lies, corruption, secrets and self serving.
  
  Too bad we can't have the desirable traits of both parties and none of the evils. Sadly, no one who used a political platform like that would ever get elected. So we go with the least damaging person, if we can figure out just who that is.
  [ link to this | view in chronology ]
  - Anonymous Coward, 29 Jun 2009 @ 10:32am
    
    Re: Re: paying attention now?
    "Too bad we can't have the desirable traits of both parties"
    
    I don't think either party has very many desirable traits.
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- Matt, 29 Jun 2009 @ 2:41pm
  
  Re: paying attention now?
  "Republicans = Lower taxes, smaller gov, less gov intrusion in our lives, more personal responsibility, FREE MARKET, MORE FREEDOM."
  So the last 8 years were...what again?
  [ link to this | view in chronology ]
  - JK, 9 May 2010 @ 4:42pm
    
    Re: Re: paying attention now?
    A lot better than the next 8 years are going to be.
    [ link to this | view in chronology ]
Joe Smith, 28 Jun 2009 @ 4:26pm

Google
A couple of countries have taken runs at Google over various legal issues. One of these days Google is going to black ball a whole country and that country will substantially disappear from the Web as a result. Its a race to see if it is France, Belgium or Italy that gets made an example of.
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- Legal Easy, 1 Jul 2009 @ 2:41am
  
  Re: Google
  It's about time that someone got tough with Google and copyright laws. YouTube is filled with copyright infringement (duh, owned by Google). Last time I checked aiding and abetting a criminal act is a conspiracty to commit the action by all parties. Well, except in this country where some palms were greased. Google also has major issues regarding privacy violations. Webcams on bikes spying on populations? DO WE NEED THIS?? Get a grip Google. You are the worlds eye in the sky. It won't be long before Google is kicked out of every country where the government is still afraid of it's citizens. That certainly won't be the US, but Google will become what it should be. A $15 stock. They have less value than Microsoft.
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J Robinson (profile), 28 Jun 2009 @ 10:28pm

Fed Sales Tax
I would vote for a repeal of the income tax and replace it with a federal sales tax.
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unconvinced, 29 Jun 2009 @ 7:34am

employee of the company?
Mike Masnick claims that NYS's law defines an affiliate as "basically an employee of the company". Not according to this Reuters article, which describes how Amazon's and Overstock's lawsuits against New York were both tossed out in January 2009. The judge said that to win, Amazon would have had to prove that the affiliates weren't soliciting business for Amazon from New York State residents. And obviously they were.

Affiliates, like door-to-door salesmen, solicit business for the company, but don't cash the customers' checks or necessarily deliver the product. Like salesmen, they get paid a commission on each sale. Like having salesmen, that's a sufficient presence in a state to obligate the company to collect sales tax. Hard to see how Amazon even thought they had a real case.

I guess Amazon could still appeal, but I think this lawsuit was just posturing, just like this threat of dropping affiliates, which is designed to see whether they can get NC residents upset enough to get the law changed. If not, they'll reinstate NC affiliates eventually (though perhaps only after enough states have passed similar laws).

Eventually, the only losers will be the tax cheats this law is targeting. Sad that Amazon is working so hard to protect them.
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Ken, 29 Jun 2009 @ 8:41am

Amazon's right
I live in NC and I am an Amazon affiliate (or was) Sorry to say, Amazon is right. The idiots who run this state think we are all cows to be milked. Sales taxes, income taxes, fees and looting of every kind. I love the state, but I was considering moving before this because of the insane looting that goes on here. This may push me off the fence. It's like living next door to the mafia. Ken http://www.kenStech.com
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John Keels, 29 Jun 2009 @ 1:28pm

Taxes on Affiliates
To everyone one of the nation,

I live in NC and am a democrat. However, on this one I have to agree that taxing the affiliate is ridiculous. However, republicasn talk about people who make themselves victims and cry. Well, why don't they start with themselves. We are in tight times right now and big cuts have to be made in government but taxes are going to have to be raised a bit as well. Its the only way to get through it.

So, republicans stop whining and get back to work. You have the benefit of schools, airports, nice roads, fire protection, police protection, regulations on banking, and any number of other things that come from paying taxes. Live within your means, pay your taxes and move on.

Complaining about tobacco taxes? Whatever, smoking is more of a tax on society in terms of healthcare costs than the tax on cigarettes will ever be. Once again, people making themselves victims so they can have cheap cigarettes. I am not trying to punish smokers. But don't expect sympathy from me on cigarette taxes which should be funneled into medicare and medicaid for "victims" of tobacco related illnesses.

Anyway, just my rant for the day.
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kevin, 29 Jun 2009 @ 7:34pm

taxes
So should they tax a transaction if say my family member in NC told me hey this is a good product and I decide to buy it? If anyone from NC recommends a product to someone outside the state either being an affiliate or on the phone, the NC G men will want to tax it eventually.

They take what they want to whenever they want to
And our needs they always come last.
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