Is Amazon Dropping Affiliates From Your State?

[raynman]

I just got this email and I'm wondering if anyone knows anything about it...

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 North Carolina General Assembly - Home Page, and additional information may be obtained from the Performance Marketing Alliance at Performance Marketing Alliance.

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.


Sincerely,

Amazon.com

I don't make much from Amazon at all so I'm not too awfully worried about it but I'm wondering if this will have an effect on other affiliate sales. That would be bad.

Anyone know what this is about?

[raynman]

This was in the link to the Performance Marketing Alliance...

North Carolina
Status: Nexus Legislation is probably part of the overall budget buried in the Senate tax bill, which may pass later in the month. However, the House is committed to not raising taxes of any kind. AB 178/ H 558 (the bill to modernize Sales Tax Stat/ Digital Goods) may have at one time had the e-commerce legislation in it, but it has been taken out and pooled with other tax issues in the budget package. The senate has been quiet on the specifics of what will be included in the package. They adjourn in early July. We will keep you posted on any action that might be needed by the affiliates, but for now, we are waiting for more information.

[bgmacaw]

Sounds like you need to move to Tennessee or South Carolina and ask the North Carolina legislature "Who is John Galt?"

[Dennis Wagoner]

Hey Warriors,

I just got an email stating Amazon will more than likely be dropping all North Carolina affiliates due to new NC regulatory laws.

According to the email, the measure is supposed to go into action in two weeks, at which time all North Carolinians will be dropped from the program.

Anyone else get a notification like this for their state?

Dennis

[liban]

I live in North Carolina, and I received the notice. My head must have been in the sand, but I knew nothing about this.

Way too late, I'm firing off a letter to my State Senator. But it doesn't look good, does it?

[bellabee]

I received the same email. I have two questions

1. Do you guys think this will also apply to other affiliate networks and/or Adsense?

2. What if a person were to just change their contact address within Amazon/the other networks to a relatives addy in a different state? Not that I'd necessarily do this, but I'm just wondering.

[WritingMadwoman]

This happened to New York affiliates too. I was able to find an article that gives the details:

New York Court Dismisses Amazon’s Objections To Paying State Taxes

Wendy

[liban]

So - has Amazon dropped all New York affililates? If not, what's the difference between the legislation there and that here in NC?

[Michael Motley]

Originally Posted by OnlineMarketingSys

interesting hopefully other states wont follow

Yeah, im sure they wont. I mean its not like the government just put us neck deep in debt and every state is looking for new revenue sources or anything .

[WritingMadwoman]

Originally Posted by liban

So - has Amazon dropped all New York affililates? If not, what's the difference between the legislation there and that here in NC?

I'm not sure! I've found mention that Overstock.com did indeed drop NY affiliates, but I can't find anything about Amazon doing it.

Wendy

[raynman]

Originally Posted by WritingMadwoman

This happened to New York affiliates too. I was able to find an article that gives the details:

New York Court Dismisses Amazon’s Objections To Paying State Taxes

Wendy

ugh....thanks.

Back in April, the New York State legislature passed a bill requiring Amazon to collect taxes from New York State residents even though it doesn’t have a physical presence in the state (the normal requirement for retailers). The state got around the physical presence requirement by counting affiliates as part of Amazon. Amazon (and Overstock) filed lawsuits seeking summary judgment against the State of the New York. Yesterday, a New York State judge dismissed those lawsuits, potentially throwing the case into the Court of Appeals.

The question, though, is not whether Amazon should collect New York State taxes. It would be trivial for Amazon to do so during the checkout process for residents of New York. (Update: In fact, it’s been doing so since the law was passed last summer). The real issue is the way the law gets Amazon to do so by dragging its affiliates into it.

[JeanetteatBeach]

I just got the same email today from Amazon Affiliate Program - I was going to set up several affiliate websites over the next two weeks with Shareasale, CJ, Ebay and Clickbank products - anyone have any idea if they will be affected? I don't want to put in a significant effort if everything is going to disappear here in NC.
Any ideas of what took place in NY?
Thanks
Jeanette

[ExRat]

Hi bgmacaw,

Sounds like you need to move to Tennessee or South Carolina and ask the North Carolina legislature "Who is John Galt?"

Shrugs

[raynman]

how are they going to check to see if my residence is in NC? are they going to go check IP addresses or something>

I just don't understand how they can do this. can i just change my residence to another state? i live in another one a few months out of the year anyway. what's to keep me from claiming that as my residence but still staying in NC most of the time?

i just don't know how this is going to work. is it just a matter of checking Amazon's affiliates addresses?

Are they going to stop sales to people in NC?

Frustrating......

[bgmacaw]

Originally Posted by ExRat

Hi bgmacaw,



Shrugs

Atlas Shrugged - Wikipedia, the free encyclopedia

[MichaelHiles]

Andy Beal made a post on his blog this morning.. North Carolina Close to Enacting Affiliate Taxes; Amazon First to Pull the Plug

[new2ebiz]

Originally Posted by raynman

how are they going to check to see if my residence is in NC?
Are they going to stop sales to people in NC?

I got my notice in the email today.

This is my guess as to how the logistics would work.
Amazon will have your payment address for sales, the irs simply checks Amazon's list. When you fill out your income taxes they will know where you claim as your primary residence.

This 'find what else we can tax' is likely to continue, as someone else pointed out, while states attempt to raise revenue to pay for services.

Will send my opinion to the necessary politicians but am also looking into contacting a major news outlet to see what I can stir up. I live in a small town but it would seem a larger population center would be a better place to do that.
As much as I might not like the news media today I don't feel bad about using them to help regular people make ends meet.

One of the points I will make is the state ends up with less money because they lose the income tax they could have received because state residents don't make the money once made, because companies will not deal with NC business people anymore. Something along the line of 'cutting off your nose to spite your face' .

It's just another heads up.

And another example of why one should have multiple streams of income.

Good luck to all.

[ExRat]

Hi bgmacaw,

Quote:
Originally Posted by ExRat
Hi bgmacaw,

Shrugs

Atlas Shrugged - Wikipedia, the free encyclopedia

My humour is obviously way too cryptic. I recognised your quote immediately, as I use it myself in the same context as yourself. The confused, *shrugging* smiley was meant to resemble someone who feels that 'there's something terribly wrong with the world.' Hence, why I thanked you (previously) for your ironic, but topical post.

[bgmacaw]

Originally Posted by ExRat

Hi bgmacaw,

My humour is obviously way too cryptic. I recognised your quote immediately, as I use it myself in the same context as yourself.

I thought so but I wanted to let everyone else who was interested in on it.

[raynman]

Originally Posted by MichaelHiles

Andy Beal made a post on his blog this morning.. North Carolina Close to Enacting Affiliate Taxes; Amazon First to Pull the Plug

good read. thanks.

increase taxes during a recession = dumb

tax the businesses more and make them move...it worked for California.

Virginia and Tennessee are pretty close to where I am now and I spend a lot of time in South Carolina. It just makes sense to take my business elsewhere.

[Cash37]

If you have not heard, our state is the only one that is moving forward with the affiliate tax. Amazon is already going to be cutting ties with NC affiliates on or before the date the tax is enacted.

Please look up your Senator here: North Carolina General Assembly - NCGA - Representation

And send them a letter to let them know the mistake they are making!

Subject: OPPOSITION to Senate Bill 487


Dear Representative [Insert Last Name]:
I am a small business owner with a website, and I am in strong opposition to Senate Bill 487, which would require retailers that advertise and receive direct or indirect referrals from advertising on websites, such as mine, to collect sales tax in North Carolina.



I am opposed to this bill because it would substantially harm my small business by reducing a large source of revenue that I rely on to survive. This revenue results from providing advertising on my website on behalf of out-of-state retailers.



If retailers believe that doing business with me will result in their having to collect sales tax on all North Carolina sales, they likely will sever ties with my business, putting the viability of my business at risk. Such was the case in New York State where Overstock dismantled its affiliates program and hundreds of other business followed Overstock’s example. This left thousands of affiliates – most of which are small- and medium-sized businesses with a major loss of income.


For these reasons, I respectfully oppose this legislation.


Sincerely,
[Your Name]

PLEASE TAKE 5 MINUTES FROM YOUR DAY TO DO THIS.

I'm already looking to move ASAP.

[ladyshadowrider]

I got that email from Amazon also

In doing some research this morning I ran across this webpage on the American Booksellers Association website that is a sample letter for their NC members to send to their senator in support of Senate Bill 487 claiming it will "level the playing field" for brick and mortar book stores. They are even more delusional than the lawmakers.
ABA: Sample Letter to North Carolina Senator

I also found the links where you can read the 2 bills that were put before the NC General Assembly

http://www.ncga.state.nc.us/Sessions...PDF/S487v1.pdf

http://www.ncga.state.nc.us/Sessions...PDF/H558v1.pdf

There is also an active thread over at the ABestWeb forum about this and some participants are trying to get a group together to fight this.
Add North Carolina Affiliate Tax - ABestWeb Affiliate Marketing Forum

I'm in the Raleigh area with bull horn and picket sign ready!

As for the question about the logistics of collecting sales tax...if this gets passed in NC, all internet based companies who have affiliates in NC will have to collect sales tax on ALL SALES MADE TO NC RESIDENTS regardless of whether or not those sales were made by an affiliate residing in NC because the law views companies having 1 or more affiliates within the state as a "nexus" or physical presence in the state.

However, if the internet based company terminates their NC affiliates, they will technically no longer have a "nexus" in the state and will no longer have to pay NC sales tax on sales made to NC residents. This is why Amazon and OverStock tried to fight the NY sales tax law after they terminated all their affiliates in NY. Unfortunately, the greedy b@st@rds in NY didn't let Amazon and OverStock off the hook, so they terminated their NY affiliates for nothing.

For more information about what a "nexus" is and why this whole mess is pretty much unconstitutional, you can read this article about Internet Sales Tax Fairness Internet Sales Tax Fairness | The New Rules Project

I think you'll see that considering an affiliate to be a "nexus" is really stretching the interpretation of the word.

HTH,
Tamara

[Cash37]

What else can we do? Is moving really the best option?

Citizens Against Net Taxes has a map of all the states with internet taxes, only North Dakota is exempt.

[raynman]

I sent an email to my congress people.

Hmmm....we are internet marketers. You think there is some way we can get the word out to other IMers and draw heat/attention to the state congress people and what they're planning to do?

Might be a futile effort that results in my moving but I don't want that to happen.

[CDarklock]

About twenty years ago, a bill was passed in North Carolina that essentially said men were not allowed to have erections ("a perceptibly turgid state").

Why anyone still resides in this state is beyond me. The legislature is clearly insane.

[Cash37]

Originally Posted by raynman

I sent an email to my congress people.

Hmmm....we are internet marketers. You think there is some way we can get the word out to other IMers and draw heat/attention to the state congress people and what they're planning to do?

Might be a futile effort that results in my moving but I don't want that to happen.

Maybe email the news stations too.

[Barbara Eyre]

So, basically, if passed - there will be no sense in North Carolina residents trying to be an affiliate for any company - because the company would have to charge NC sales tax on any purchases done in NC that were made via any affiliate link.

So, NC would be cutting off another form of income for their residents ... so less money in circulation. Lovely!

Now, I know there aren't a heck of a lot of us in NC that is even on the internet (especially here in the Foothills) ... but still ...

[affenpinscher]

If you're looking for a new place to do business from, these states currently do not have any sales tax:

Alaska, Montana, New Hampshire and Oregon.

It's very likely affiliate programs besides Amazon will ban affiliates from states such as
New York that are going to apply sales tax to affiliate sales in their states.

Note: Delaware is a great state for incorporation. Although there's no sales tax on individuals, there is a gross receipt tax (with a highest rate of less than 2%) applied when certain thresholds are met. It might be worthwhile for some people to investigate this.

[Jeff_Gardner]

The writing is on the wall.

Amazon is dropping affiliates, because if they were to start paying sales taxes on all of the sales made by affiliates, all 50 states would quickly follow suite.

Here's the problem: Amazon can't drop 100% of it's affiliates, so the States are putting the squeeze on them one state at a time. As more states enact this legislation, there comes a time when Amazon will agree to paying sales tax in all 50 states.

However, this isn't new.

I own a Network Marketing Company - and every "distributor" is considered a "Nexus". Meaning, the States believe that every distributor in our company is just a subsidiary of our company. Therefore, we're already set up to collect and pay sales tax on all sales. Our headquarters are in Texas - but if someone buys something in New York, we charge and pay sales tax to New York.

A paperwork and filing nightmare?

Yes. Fortunately, because of companies like ours (and soon, companies with affiliates), there are service providers who can calculate, file forms, and pay your taxes for you in all jurisdictions. Cheap? No. A pain? Absolutely. But it keeps us from dropping distributors in big states.

Many states are moving toward a "Standardized Sales Tax" (SST) which makes it easier, but not all states are on this - and many states want to do their own thing.

SO, look for companies with any affiliates to start paying sales taxes for all states in the next 2 to 5 years. I'd be surprised with the legislation going through state-by-step if it takes 5 years. More likely 2 to 3. We'll see.

Anyway, if you've got affiliates, start preparing. Check out companies like Avalara, look into SST, and just do your due diligence before this comes. Because it is coming.

Best,
Jeff

[Cash37]

Originally Posted by Jeff_Gardner

The writing is on the wall.

Amazon is dropping affiliates, because if they were to start paying sales taxes on all of the sales made by affiliates, all 50 states would quickly follow suite.

Here's the problem: Amazon can't drop 100% of it's affiliates, so the States are putting the squeeze on them one state at a time. As more states enact this legislation, there comes a time when Amazon will agree to paying sales tax in all 50 states.

However, this isn't new.

I own a Network Marketing Company - and every "distributor" is considered a "Nexus". Meaning, the States believe that every distributor in our company is just a subsidiary of our company. Therefore, we're already set up to collect and pay sales tax on all sales. Our headquarters are in Texas - but if someone buys something in New York, we charge and pay sales tax to New York.

A paperwork and filing nightmare?

Yes. Fortunately, because of companies like ours (and soon, companies with affiliates), there are service providers who can calculate, file forms, and pay your taxes for you in all jurisdictions. Cheap? No. A pain? Absolutely. But it keeps us from dropping distributors in big states.

Many states are moving toward a "Standardized Sales Tax" (SST) which makes it easier, but not all states are on this - and many states want to do their own thing.

SO, look for companies with any affiliates to start paying sales taxes for all states in the next 2 to 5 years. I'd be surprised with the legislation going through state-by-step if it takes 5 years. More likely 2 to 3. We'll see.

Anyway, if you've got affiliates, start preparing. Check out companies like Avalara, look into SST, and just do your due diligence before this comes. Because it is coming.

Best,
Jeff

This is more about affiliates than merchants. You can just cut off affiliates. Its a LOT harder on us affiliates who make full time income to figure out what to do, which most likely will end up in a move to a new state.

[CDarklock]

Originally Posted by Jeff_Gardner

As more states enact this legislation, there comes a time when Amazon will agree to paying sales tax in all 50 states.

And those of us who really dislike this will just move to Oregon...

[liban]

Just talked to my Senator's office. They said the legislation is not on the calendar. The lady I spoke to wasn't familiar with the bill nor with affiliate marketing, so I filled her in. (And yes, I was very nice and polite, and used words she could understand. Pat me on the back.)

There are a lot of us in NC, btw.

And we live here because we have roots here, it is a GREAT place to raise a family, and it's our home.

[LIndaB]

And those of us who really dislike this will just move to Oregon...

We may not have a sales tax, but that doesn't mean we have less taxes - they more than make up for it with property taxes and income taxes.

[Jeff_Gardner]

Originally Posted by Cash37

This is more about affiliates than merchants. You can just cut off affiliates. Its a LOT harder on us affiliates who make full time income to figure out what to do, which most likely will end up in a move to a new state.

That's why we already register and pay sales tax in all 50 states. I'd rather go through the expense of setting up and paying sales tax - than dropping Associates who spent their own time, money, and energy building their business. It's not fair to affiliates to give them the opportunity to build a business (which many rely on for their full-time income) --- only to dump them unceremoniously.

I think it's time for the merchants to either fight back - or get set up to pay sales tax in those states.

[KirkMcD]

Originally Posted by ladyshadowrider

Unfortunately, the greedy b@st@rds in NY didn't let Amazon and OverStock off the hook, so they terminated their NY affiliates for nothing.

Amazon never dropped their NY affiliates. They started charging NY sales tax instead.
It doesn't make sense that they aren't doing it for NC too.

[Marian Berghes]

Im not affected by this but let me get this straight: If Amazon (or any other website that has an affiliate program) has to pay a tax for the commission that the affiliate would earn?

Like if you now had 35$ commission on one product, for the seller to stay legal he would have to only pay you 25$ or something?

I can't really understand what the tax is about,how much is it, and how does it apply to lets say a product launch? anyone care to explain please?

[Eric Lorence]

Got news for you, this is just the beginning...

Cash strapped states... and Nations have been looking at this for some time now. This nonsense will spread like wildfire over the next decade.

And not just Amazon, any affiliate based compensation system will be fair game.

[bgmacaw]

Originally Posted by Eric Lorence

Got news for you, this is just the beginning...

Time to alert Rick Santelli.

[clint48]

Just received notice that all North Carolina Residents will be terminated from the Amazon.com affiliate program, over state sales taxes.

Clint

[LIndaB]

Clint, here is another thread on this topic with a lot of discussion that you might want to check:

Is Amazon Dropping Affiliates From Your State?

[ladyshadowrider]

Originally Posted by KirkMcD

Amazon never dropped their NY affiliates. They started charging NY sales tax instead.
It doesn't make sense that they aren't doing it for NC too.

Sorry, guess I was misinformed.

And, you're right, it doesn't make sense unless NC affiliates aren't bringing in as much revenue for them as NY does. It's all about the Benjamin!

Tamara

[The Expert]

I'm thinking that if I was living in NC and wanted to stay with Amazon I would setup and LLC in a different state and move my Amazon account over there.

If I couldn't, move my account I'd setup a new one and move all my site's links to the new account just as if i had bought the site from someone else.

[YellowDot Software]

I think the uptight bureaucrats are jealous of you city slicker liberals sitting around at home in your underwear making a full time living

[Jack Duncan]

Yep...this email hit my inbox this morning.

North Carolina has truly gone over the deep end on this one.

The motivation seems to be a budget gap...as explained here:
Amazon Associates To Pull Out Of North Carolina Due To “Unconstitutional Tax Collection Scheme”

I think the best solution is to setup another company in another state and setup an affiliate account with Amazon through that company...but it's a real pain in the butt to do.

Cheers,
Jack Duncan

[jacktackett]

Wow - I didn't know there were this many fellow warriors in NC.

First realize this is not a done deal - you need to contact your state senators and legislatures - you can look them up either at your local county's voter registration office or here:

North Carolina General Assembly - Home Page

There's also an online petition started to let the government know we're opposed to this potential legislation:

Internet Marketers Against the NC Affiliate Tax - Petition Spot

Remember, democracy is not a spectator sport....

best,
--Jack

[jacktackett]

Originally Posted by ladyshadowrider

I'm in the Raleigh area with bull horn and picket sign ready!

Tamara,
I'm in Cary and if you need someone to help make signs let me know!
best,
--Jack

[Cash37]

I'm so pissed right now.

[braver55b]

I just checked my bank balance and noticed that I got paid by Amazon and I would hate for this type of legislation to be passed here in the "Show me" state.

NC could be making their state be seen as not a good place to do business in.


If I got wind of something like that here, I would be contacting them and making a "stink" about it.

[Gail Sober]

Seems like legislation like this could really blur the lines between 1099'd independant contractors and employee.

Does this mean the independant contractors in NC are not considered as having their own business? Will they become eligible now for workers comp, etc..?

[Cash37]

We are writing from the Amazon Associates Program to notify you that your Associates account has been closed as of June 26, 2009. This is a direct result of the unconstitutional tax collection scheme expected to be passed any day now by the North Carolina state legislature (the General Assembly) and signed by the governor. As a result, we will no longer pay any referral fees for customers referred to Amazon.com or Endless.com after June 26. We were forced to take this unfortunate action in anticipation of actual enactment because of uncertainties surrounding the legislation’s effective date.

Please be assured that all qualifying referral fees earned prior to June 26, 2009 will be processed and paid in full in accordance with our regular referral fee schedule. Based on your account closure date of June 26, 2009, any final payments will be paid by September 1, 2009.
In the event that North Carolina repeals this tax collection scheme, we would certainly be happy to re-open our Associates program to North Carolina 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 have enjoyed working with you and other North Carolina-based participants in the Amazon Associates Program, and wish you all the best in your future.

Best Regards,
The Amazon Associates Team

**** **** ****.