Following in New York’s footsteps, North Carolina is set to enact a similar Amazon Affiliate Tax, by which we mean that sales generated by someone in North Carolina via an affiliate program will be taxed (New York enacted an affiliate sales tax last year, over which New York was promptly sued).
And, as we predicted when the Court upheld New York’s Amazon tax, other states are now following New York’s lead and, as we also predicted, Amazon is now letting go their affiliates in such states.
This may be more than just Amazon throwing in the towel – it may actually be a very shrewd move on their part. These state legislatures aren’t going to care about Amazon complaining about these taxes – but they will (or at least should) care when their voters – the people whom Amazon feels forced to let go from their affiliate program – start complaining.
And, indeed, it is very short-sighted of these legislators to try and balance their budges on the backs of their citizens who happen to be affiliates of Amazon, Overstock, and the like. Because, except possibly for the first year or so, it’s not going to bring in a lot of money. Instead, it’s going to simply reduce the income of their citizens, as affiliate programs drop affiliates in those states. Which means, in turn, it’s going to reduce the spending power in the state, and instead of stimulating the state economy, it’s going to negatively impact it.
Amazon has this to say about it, to their North Carolina affiliates:
We regret to inform you that the North Carolina state legislature (the General Assembly) appears ready to enact an unconstitutional tax collection scheme that would leave Amazon.com little choice but to end its relationships with North Carolina-based Associates. You are receiving this e-mail because our records indicate that you are an Amazon Associate and resident of North Carolina.
Please note that this is not an immediate termination notice and you are still a valued participant in the Associates Program. All referral fees earned on qualified traffic will continue to be paid as planned.
But because the new law is drafted to go into effect once enacted – which could happen in the next two weeks – we will have to terminate the participation of all North Carolina residents in the Amazon Associates program on or before that same day. After the termination day, we will no longer pay any referral fees for customers referred to Amazon.com or Endless.com nor will we accept new applications for the Associates program from North Carolina residents.
The unfortunate consequences of this legislation on North Carolina residents like you were explained in detail to key senators and representatives in Raleigh, including the leadership of the Senate, House, and both chambers’ finance committees. Other states, including Maryland, Minnesota, and Tennessee, considered nearly identical schemes, but rejected these proposals largely because of the adverse impact on their states’ residents.
The North Carolina General Assembly’s website is http://www.ncleg.net/, and additional information may be obtained from the Performance Marketing Alliance at http://www.performancemarketingalliance.com/.
We thank you for being part of the Amazon Associates program, and we will apprise you of the General Assembly’s action on this matter.
Dear North Carolina Legislators,
Please get a clue.
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