Tuesday, 09 March 2010

• Amazon Cuts Affiliates to Avoid Charging Sales Tax

  
  

  Colorado has recently passed a new law to collect sales tax on online purchases. Though technically the new law doesn't strictly require paying sales tax to Amazon, that's essentially the result. The other option is for retailers to track customers' spending and send them statements of their total spent so the customer can pay the sales tax directly to the state.

  Rather than go this route, Amazon repeated what it did with affiliates in Rhode Island and North Carolina when those states passed similar laws. They chose to terminate the business relationships rather than be responsible for sales tax. If they stayed with their Colorado affiliates, Amazon could be forced to turn over the customer statements to the state as part of the state's enforcement of the new law. The sales tax law would affect Amazon customers around the country because the taxes are levied against products shipping from the affected affiliates. So if your product came out of Colorado, you would have to pay the Colorado sales tax, no matter where you lived.  
  

  Apparently lawmakers predicted this very thing and it figured into their debates when considering the law. Many predicted that Amazon, which has about 4,200 affiliates connected to it, would rather leave than be responsible for sales taxes. Most of these businesses, which rely on Amazon to some degree should be fine,  but smaller businesses that get a large part of their revenue from the mega-shopping site may be hurt by this move.

  Do you support Amazon's move? Or would you rather they retained their affiliates and charged sales tax where necessary?

  [via Associated Press]
  

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