Amazon Cuts Off Affiliates In Hawaii And Rhode Island... Who Else Wants To Try?

from the you-might-make-them-angry dept

Wed, Jul 1st 2009 1:31am — Mike Masnick

Last week, Amazon decided to cut off North Carolina affiliates due to proposed legislation that would have affiliates (really, advertisers) be considered as local "employees" for the sake of proving that Amazon had a business "nexus" in the state, and thus need to collect state sales tax there. It appears similar legislation is popping up across a bunch of states, and Amazon is cutting off affiliates one by one. Affiliates in both Hawaii and Rhode Island have been told that they can no longer sell via Amazon over this issue. It'll be interesting to see if any states back down. Pissing off a bunch of small business owners who make money selling products via Amazon probably isn't a particularly wise thing to do in the middle of a recession.

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Filed Under: affiliates, hawaii, rhode island, sales tax
Companies: amazon

26 Comments

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Headbhang, 1 Jul 2009 @ 2:49am

LOL. Pwned.
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inc (profile), 1 Jul 2009 @ 3:59am

backfire
I wonder if amazon gets enough business from affiliates to care once every state has been blocked. I think the proposed changes are stupid, but is this the right business move?
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Aj, 1 Jul 2009 @ 4:04am

Re: backfire
"right business move?"

Sure it is. Once you open the tax door you can never close it, and it will only become more and more. Greed has no limit. The only way you can stop it is by not letting it happen in the first place.
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TX CHL Instructor (profile), 1 Jul 2009 @ 4:21am

Re: backfire
Sure, it's the right move. Sometimes doing something on the basis of principle can be costly, but appeasement is guaranteed to be even costlier in the long run.

I think Amazon is on the right side of this one.
--
www.chl-tx.com (Thanks, BHO, for the wonderful stimulus you have given *my* business!)
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rnclem, 1 Jul 2009 @ 5:29am

Amazon & Sales Tax
I quit using these bozos about 6 months ago when they added 9.5% sales tax to an order that should have been 8.5%, which is what my local sales tax is. They also charged me shipping on an item listed as "free shipping". At that time I complained about both problems, got an email that said "sorry about the error, we will look into it", that was over 5 months ago and nary a thing since.
I have found since this happened, that I can use them to find items, but buy direct from the seller or go with another seller that is a few cents higher and save a lot, as most sellers won't ripp you on the taxes, (if there are any) and really do honor "free shipping".
Don' use Amazon for your purchases, they are just a search engine that is charging you as a consumer for being the middle man, and making a big profit in the process.
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Rob R. (profile), 1 Jul 2009 @ 5:40am

Re: backfire
It's exactly the right move. Amazon can afford the hit, but can the states? It's the same thing that's going on with the music industry in the UK and Google responding like they are. Google can take the hit, but can the music folks?

I applaud them for taking a stand against what is 100% greed and money-grabbing. The states think they can just start grabbing revenue from everyone online and unless someone like this takes a stand and shows them who is really the boss (the citizens, not the governmental officials), this will just get worse and worse.

This also demonstrates what needs to happen any time a state or a business tries something like this. Boycotting works. It works very well. Anyone else think this is exactly what should happen to the RIAA?
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Rob R. (profile), 1 Jul 2009 @ 5:43am

Re: Amazon & Sales Tax
Or you could ignore this whiner that only gives one chance and listen to the millions of others (like me) that buy things via Amazon frequently and have no problems at all, or small problems that get resolved after we follow up on them instead of putting in a support request and then ignoring it.
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Joseph Durnal, 1 Jul 2009 @ 6:16am

At least in MD
I had been doing some digging and I'm still not 100% sure, bit in Maryland, it seems that you are legally required to pay sales tax on things that you mail order from other states. The problem is that it would be very hard if not impossible to enforce.
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Anonymous Coward, 1 Jul 2009 @ 6:25am

The funny part in the end is this is a great move for Amazon as well. Losing affiliates isn't a big issue, and many of the affiliate links out there are old and aren't going to disappear overnight.

Most people know Amazon directly now, so why pay to advertise when you no longer need to? Seems to be a way for Amazon to get out of the affiliate program business.
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David (profile), 1 Jul 2009 @ 6:36am

Hmm..
I think this may still happen in more states as they try to figure out how to make more money in a climate where they have less, too.

I agree that it is a right move for Amazon, and they have made a lot of money in taking big risks, many of which have paid off.

As fare as the AC who said "why use affiliates", that is a simple answer. Amazon is well known, but affiliates often point directly to products or categories that are about the topics that their websites, or content are about. This catches the consumer when they are ready to buy. A "win-win" scenario for all involved.
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No Imagination (profile), 1 Jul 2009 @ 6:42am

Re: At least in MD
Technically, and correct me if I am wrong, but as an individual I believe you are required to pay sales tax on anything you buy in another state (that you are not a resident of).

So many problems with that statement, I know, but a few years ago NY actually tried going after people who bought clothing in NJ (No Sales Tax in NJ on clothing (at the time)), not sure how all that played out.

More recently they are doing it with cigarettes...
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Michial Thompson, 1 Jul 2009 @ 7:20am

States wouldn't need to pass these laws
IF the citizens obeyed the laws in the first place. MOST, if not ALL states require that the purchaser pay taxes on items purchased from out of state.

Amazon wouldn't have to cut these states off if the citizens paid their taxes like they are supposed to.
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Anonymous Coward, 1 Jul 2009 @ 7:25am

Re: Re: Amazon & Sales Tax
I once ordered an expensive collection of games from Amazon. Apparently, they had omitted an important part of my address, and it got lost somewhere in the mail, as too much time had happened and I never received it. I emailed them to complain, and they were very nice, in fact they're the ones who told me about the mistake. They promptly sent a second copy of the game (I had to clear it with customs, because they sent it with a Zero cost invoice). I received it almost immediately, and funny thing, somehow the courier service I use figured out my address in the end (or sent it to a relative with my same last name or something). So I ended up with two copies of the game. Go Amazon!
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Hephaestus (profile), 1 Jul 2009 @ 7:26am

Re: At least in MD
Not sure about the actual wording of the law, but did you "Mail" anything to get your order shipped to MD??

big ole GRIN ......
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Anonymous Coward, 1 Jul 2009 @ 7:52am

Fantastic move on the part of Amazon.

I love it when businesses do not roll over and play dead by simply accepting anything the politicians try and pull.
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Someantimalwareguy, 1 Jul 2009 @ 9:01am

Re: States wouldn't need to pass these laws
The problem here is that the state tax authorities have no reliable mechanism to force compliance on the part of the consumer. When you go to your local store, any taxes due are assessed at the register and the only way for the consumer to avoid the tax is not to consume the products offered. IOW - pay or go home.

On the internet, there is no way for the state to monitor these purchases or to determine with absolute certainty that any given item was purchased by a resident of their state...

One suggestion is to enact a national sales tax similar to VAT in the EU but also include a means where a consumer or business could "trade" the native tax rate where the good or service is purchased to their local tax rate. In this scenario, the seller would be responcible for collecting the tax due and remitting the appropriate ammount to their state tax agency (consumer does not choose to trade tax rates) or to the tax agency of the purchaser�s home state.

This would raise overall prices however to account for the additional overhead associated with administration and enforcement, but it would have a far better chance of success than relying on tax payer honesty...

JMHO
Mike
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Anonymous Coward, 1 Jul 2009 @ 9:45am

"IF the citizens obeyed the laws in the first place. MOST, if not ALL states require that the purchaser pay taxes on items purchased from out of state."

See, I don't understand that.

If I go to Jersey and buy something, I pay sales tax there on that item. So, IF I obeyed the laws, I would have to pay an additional TAX on that item because I am a resident of another state?? i.e. pay NY and NJ sales tax on a candy bar?!
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Avatar28 (profile), 1 Jul 2009 @ 10:42am

Re:
I believe that you are generally only expected to pay the difference in tax rates in most cases.
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btr1701 (profile), 1 Jul 2009 @ 11:06am

Re: Re: States wouldn't need to pass these laws
> This would raise overall prices however to
> account for the additional overhead associated
> with administration and enforcement, but it
> would have a far better chance of success than
> relying on tax payer honesty...

Or the frakking government could just spend less money instead of engaging in this never-ending quest for more and more of its citizens' money.
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Anonymous Coward, 1 Jul 2009 @ 4:10pm

Re: States wouldn't need to pass these laws
Are you for real or are you just a troll? Tell me with a straight face that you self-report and pay in-state sales tax on all of your out-of-state purchases.
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G man, 1 Jul 2009 @ 4:46pm

stand your ground Amazon!
If Amazon caves, this will create a very dangerous precident. Lets hope it sticks by it's guns.
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John C, 2 Jul 2009 @ 5:15pm

Re: Anonymous Coward
"If I go to Jersey and buy something, I pay sales tax there on that item. So, IF I obeyed the laws, I would have to pay an additional TAX on that item because I am a resident of another state?? i.e. pay NY and NJ sales tax on a candy bar?!"

I don't know how your state handles it, but Utah, where I live, requires that I you paid less tax in the other state than you would in your home state, you must make up the difference. If you paid more tax there than you would here, you don't have to pay any additional.

This is not a new tax, by the way, folks, the states are simply trying to get the online retailers to collect existing sales tax just like a brick and mortar store does. That's called equal treatment. Furthermore, Amazon knows how to do it. They already collect taxes on purchases made through other retailers websites they run, like Target's. We shouldn't be falling for their bull. Amazon just doesn't want to be a good corporate citizen.
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John C, 2 Jul 2009 @ 5:17pm

Re: Re: backfire
This is not a new tax, folks, the states are simply trying to get the online retailers to collect existing sales tax just like a brick and mortar store does. That's called equal treatment. Furthermore, Amazon knows how to do it. They already collect taxes on purchases made through other retailers websites they run, like Target's. We shouldn't be falling for their bull. Amazon just doesn't want to be a good corporate citizen.
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FarSide, 7 Jul 2009 @ 4:21am

Good corporate citizen?
Does that phrasing sound creepy to anyone else, or is it just me?

A good citizen - corporate or otherwise - isn't defined by whether you pay taxes. Or if you just bend over and take any government mandate. You are a good subject to the state, but not a good "citizen".
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HomerJ (profile), 7 Jul 2009 @ 6:41am

Re: Re: Re: backfire
Target and others have a brick and mortar presence in most states and thus must colelct sales tax. Amazon does not, so they are not required to colelct sales tax in most states. I am not sure if it still true, but they used to pay the sales tax for orders in states where they have a presence as a way to not charge any customers sales tax.
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HomerJ (profile), 7 Jul 2009 @ 6:43am

Re: Re:
Here's an interesting question. What if your state has a lower sales tax. Will they refund you the difference..... I would not hold my breath waiting for a check.
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