newsobserver.com blogs

Under the Dome

Amazon cuts off commissions

Amazon.com cut off state residents today from a commission program that rewards Web sites for linking to the online retailer's products.

The move was surely designed to raise the pressure on lawmakers, who are considering using the commission arrangement to justify levying sales tax on sales Amazon makes to North Carolina residents.

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.

The commission program provides some Web site owners with a little extra spending money. For Rick Owings and his wife, the program accounted for two-thirds of his income, or more than $70,000 a year.

"There's not enough left to make a mortgage payment," said Owings who runs his Web site, GPSTracklog.com, from Asheville. "Unless the legislature changes this, we're moving out of state. We're taking our business and all the income tax we're paying with us."

Owings' site provides reviews and resources for people interested in buying GPS devices. Like many similar review sites, product descriptions include plenty of links for where to buy online. 

It's unclear how many North Carolinians participate in the program because Amazon.com doesn't discuss specifics about its Associates program. 

More after the jump.

—————

The Amazon.com e-mail encourages its former associates to contact lawmakers about the tax. If the provision does not survive the budget bill, the message states that Amazon would consider reinstating the program.

House Democrats included the so-called "click-through" provision in a $780 million tax package that was meant to mitigate cuts to state spending. The state is facing an unprecedented drop in revenue and lawmakers have proposed various combinations of cuts and taxes to balance the budget.

The click-through provision is intended to give the state justification to levy sales tax on sites such as Amazon.com, which has no physical presence in the state. The company says the plan violates the Commerce clause of the U.S. Constitution. 

It has challenged a similar provision in New York state.  


Comments

Comment viewing options

Select your preferred way to display the comments and click "Save settings" to activate your changes.

Re: Amazon cuts off commissions

So let me get this straight: currently each person who orders something off of Amazon (or other online retailer) is supposed to keep accurate records of their purchases and then pay sales tax to NC at the end of the year. However, individual purchasers don't generally keep the records or pay the taxes. So the NCGA comes up with a way to require the more sophisticated party, who can most easily and efficiently keep the records and pay the taxes, to bear that administrative burden. I see this as entirely appropriate and good public policy.

To the extent that the South Dakota case establishes precedent that prevents this burden-shifting, the holding needs to be re-evauated by SCOTUS. I haven't read (and am not going to read) the opinion, but I think it or a related decision may address the more vexing question of apportionment of sales tax between seller's state and buyer's state.

It seems to me the affiliates are getting screwed by Amazon, which is in effect taking the position of abetting tax fraud by individuals who don't keep records of their tax free purchases. When you place an order you put in your shipping and billing address, so it wouldn't take that much more computing power for the retailer to calculate your sales tax based on where you live.

Re: Amazon cuts off commissions

Oh Yea... I also own the island of manhattan. If people from North Carolina are not producing local websites then out of state doamin name farmers will pick off our state and North carolina will become a generic landing page instead of thought provoking websites produced by local people.

I admit I am a little extreme but I set out to design a large network of websites to compete with the Barry Dillers of the world. I had to do something because my cash flow is quickly turning to no flow so I am putting in the extra time, energy and thought which will produce results and perhaps revenue.

This is a real kick in the gut so I am a little bitter and more than willing to move on.

Re: Amazon cuts off commissions

Dear It's hurting my brain,

it hurt my brain to develop my formula. I have been collecting my own content for years. I own a large collection of Rt. 66 photos which I took. I also own one of the the largest collection of photographs of the American flag. I own video and first hand experiences I can write about. I have years of content for several websites.

I have spent the past few weeks producing hours of raw video of me gardening for UglyGarden and NCGardener. I have written reviews for USBrewedBeer and I have early stage video and photography for DirtyKitchenCook. I am also in the procecess of filming the RaleighGreenway and I am producing several early stage local blogs.

I admit I am in the very eary stage of production but losing Amazon changes almost everything.

Yes .. I have other sites which will be based on free content on the internet. I own the entire east coast from JersyBeachStorm to KeywestStorm and every major beach in between. I focused on North Carolina. They will be my rainy day at the beach websites and they will promote "On Demand Movies and TV shows" from Amazon.

If you don't get it or do not like my concept then go to another web site. I am not the only person holding North Carolina domain names and this Tax law will stop people from devloping new websites since the promise of a revenue stream has ended. With that said.... I can not be expected to hold domain names out of loyalty to North Carolina if I do not live in North Carolina... Yes. I buy names to protect them just a Hugh Morton developed a mountain and charged you to look at bears and other mountain animals.

Re: Amazon cuts off commissions

Okay, let me get this straight: you grab up hundreds of domain names, then set up makeshift websites with very little intellectual content, whose main purpose is to entice people to click through here and there so you can make commissions. But you're also trying to tell us you are somehow protecting domain names, and if you are forced to leave North Carolina, they will be in jeopardy?

That's just...I gotta quit thinking about this. It's hurting my brain.

Re: Amazon cuts off commissions

I am in the process of moving out of state. I plan to have a new residence by the end of July. I am planning to sell UNCReunion, CarolinaReunion, NCStateReunion, UNCHomecoming, OBXLandmarks, BiltmoreAve, CapitalBlvd, NCBlackHistory.com plus more than two hundred other North Carolina domain names which I had been busy setting up as blogs. Don't blame me in five years when most of the Good North Carolina domain names are owned out of state and do not represent any local interest.

This is ground breaking tax law and is designed to go straight to court where the attorney's hired by the state make a fortune.

As for the book store owner supporting this law. I often buy books from her store because I always try to buy local. Please read my first sentence where I say I am moving away from North Carolina so I will not be here to buy books in North Carolina.

I just got RedneckStunts.com on line and even though it is an early phase, it will soon be produced out of state. This is breaking my heart.

Re: Amazon cuts off commissions

...and they want you to keep on thinking that too, while you still vote for them as the clueless imbeciles in NC seem to do time after time...damn a bunch of NC democrackkks!

Re: Amazon cuts off commissions

"Nobody made anybody start a brick/mortar book store in NC and nobody is stopping a brick/mortar from closing up shop and going entirely online from some other state to make sales."

Actually, that would also apply to other businesses, like textile mills.

Oh, that's right, they already left.

Re: Amazon cuts off commissions

The NC general assembly is desperate for more money they can waste. Our general assembly and governor are about as dumb as they get.

Re: Amazon cuts off commissions

For the record, Quail Ridge Books is located in Ridgewood Shopping Center in West Raleigh just off the Beltline and, online. You can call or order online. You can pick a book up or have it delivered. You might even meet the author and you will pay sales tax.

Re: Amazon.com, the GOP and tax evasion

Glad you brought Streamlined Sales Tax into it. That's a great alternative. Why isn't NC pushing harder to get more retailers involved in this initiative rather than causing detriment to an entire industry within it's borders.

Not only are they hurting that industry, but since affiliates are some of the most tech savvy and tech supporting members of the state, this is putting some seriously negative appearances on a state that wants RTP and the state as a whole to be the "Silicon Valley of the East." What tech companies are going to want to come into a state that slaughters an entire tech industry? Oh yeah...the ones that we can somehow afford MASSIVE tax breaks for.

I agree with Jason. Get the spending under control, then ask me for more money.

Re: Amazon cuts off commissions

With 11% unemployment (some counties are higher), I find it hard to comprehend why the state wants to levy even more taxes on us before they get their spending under control. Do they not get the same numbers we get?

This state needs to balance its OWN budget before it takes ANY more of mine. I'm fiscally responsible - why can't the people we send to Raleigh be the same? If they can't do the job, send them home.

I'm sorry North Carolina, there is ZERO room in my budget for any tax increases. Try again next year.

Also, there IS a level playing field here. Any business can do exactly what Amazon is doing. Nobody made anybody start a brick/mortar book store in NC and nobody is stopping a brick/mortar from closing up shop and going entirely online from some other state to make sales. It's called competition and in general, not everybody is a winner.

My #ncaffiliatetax video:

http://www.youtube.com/watch?v=ZCXcIRievB8

Re: Amazon.com, the GOP and tax evasion

Since you are looking for the Fire Department, I imagine if you ask your local county or city they will tell you that in addition to property tax the large amount of their budget comes from the local sales tax - i.e. the local sales tax not being collected by Amazon. As the former mayor of Dallas told Amazon in a public hearing, "’When you are sitting at home in your virtual world and ... a fire breaks out, do you want us to send a virtual fire truck or a real big red fire truck?’

In estimates from a study released this April by Professor William Fox from the University of Tennessee, it is estimated that North Carolina State and Local Governments will lose $130 million in lost sales tax collections due to remote sellers such as Amazon not collecting sales tax. The figure rises to $161 million next year.

http://www.streamlinedsalestax.org/Execitive%20Committee/Previous_meetings/4_13_09/SSTP%20e-commerce%202009%20REV041309.pdf

Re: Amazon cuts off commissions

This is seriously a huge issue that resonates with voters.

Get it?

Re: Amazon.com, the GOP and tax evasion

Ok...for your Best Buy example, all Best Buy stores would have to close, not just change names, and they would have to be solely an online presence. Also, as affiliates, you refer to the merchant's site. You do not collect and process orders on your site, just for them to be filled by the retailer at the end. By your example they would be a sort of private labeled franchise, which by definition would have to operate as an individual business and not as a part of Best Buy.

The problem with this legislation is the ignorance or lack of education to the affiliate industry as a whole. And rather than learn and realize the full impact, legislators are justifying things with distorted numbers and unreal expectations.

Re: Amazon cuts off commissions

If you ask any of the affiliates who are getting put out of work by this click through provision, they would very likely agree, as I would, that it is fair for NC to want to collect sales tax from these online retailers. However, their method is suspect and unfair. Again, if they were requesting that Amazon collect and pay in NC sales tax on purchases from NC residents, that's one thing (point of sale tax collection). However, they are asking them to collect based on the point of referral. Thus asking consumers from every other state who happen to come through an NC affiliate's link to pay NC sales tax.

An example in practice: As a NC resident, if you go through a NY based affiliates link you would have to pay NY sales tax (which can be well over 8%) due to NY's passage of their own "Amazon Tax". Is that fair? Or would you rather the sales tax generated from your purchase go to support your local government?

If all states pass similar legislation, it will be like playing Russian Roulette with tax rates online because you have no idea what state the referring link is based in until you get to checkout and have the tax applied to your shopping cart. As a consumer this doesn't sound like a good idea.

As an affiliate manager, affiliates being out of work (as they already are after Amazon dropped them) doesn't sound good. Sales tax collection is fine. But killing jobs is not. Yes we need more money to save the jobs of teachers, prison workers, etc. But it should never be a matter of whose livelihood is more important. We should be looking for ways to save jobs across the board, not sacrificing one workforce for the sake of another.

Amazon.com, the GOP and tax evasion

I have no problem with not charging tax on non-physical goods, specfically digital entertainment -- "e"books, music, movies, games, etc.

The GOP doesn't want you to know this, but if Amazon is successful, what is to stop other companies from following their business model? The "no physcial presence in the state" argument pertaining to the business, and not the associate is just skirting the rules.

If it was that easy, there would be *nothing* to stop Best Buy from turning into Best Buy*, with "sales associate Joe Blow's Electronics Emporium" in small print. Best Buy no longer has a physical presence, and Joe Blow is only a referrer, so neither of them pays tax, but North Carolina citizens get to pay the bills. The GOP, funded by large corporations, have acted on behalf of them, not NC citizens, for decades. And they push an agenda to make it easier for the wealthy to dodge sales tax by buying things on line while the poor pays more since they don't have a computer.

Taxes are like a balloon -- states can make them smaller in one area, but the air just inflates another tax somewhere else. Or they have a smaller, weak balloon, like the road and school system in the state to our south.

Re: Amazon cuts off commissions

The letter writer must have taken one of Oblinger's smoke and mirror classes. The roads are maintained by fuel taxes paid by the carriers who ship Amazon products as well as their vehicle registration fees. Fewer products sold, less fuel used, less tax. The drivers of these trucks and all the associated vendors as well as associate sales staff live in NC and pay state income tax. Landfills are supported by my city and county taxes, not state sales tax.

The problem with places like Quail Corners is product selection, location, and hours of operation. I can order any book I wish, anytime I want, have it shipped to my door, usually free. Why would I drive in North Raleigh traffic, burning expensive fuel, looking for a book they don't have. A $50 dollar book sales for 30-40% off on Amazon, delivered to my door. That's an average savings of $15-$20, plus the cost of gas. Q.C. sales their products at full retail. The $2ish dollars I save on no sales tax with Amazon never plays into the mix.

If the state wants more tax dollars, they need MORE Amazon sales to NC by whatever means. Someone call the fire department, it's getting awfully smokey in here.

Re: Amazon cuts off commissions

WhalerCane, Ms. Olsen is mistaken as to what this bill will and won't do. NC can not force business to remit sales tax if they don't have a physical presence in this state. The NCGA is trying to pass a law that will define a large enough click through affiliate program as a physical presence. Those on-line retailers without affiliate programs will not be affected. This would be the case with Amazon as they have no terminated their affiliate program in NC.

Does USPS, UPS, FedEx not employ the folks that deliver packages from Amazon? Do they not pay income taxes? business taxes? gas taxes? etc?

I wonder if Ms. Olsen has ever considered that NC places an unfair burden on her local company instead of feeling like her competition is getting a free ride? Remember, companies don't pay taxes. People do.

Re: Amazon cuts off commissions

Yes, that letter is in the Letters to the Editor section of the N&O and is signed by both the owner and general manager of Quail Ridge Books.

I commented there too yesterday, but now after further thought, I have an issue with the comment:

"The North Carolina legislature will soon vote on a bill to decide if Internet retailers should collect and remit sales tax on their sales in North Carolina."

That's one thing.

What the "click through provision" proposes is a completely other thing all together.

Well said

I'm assuming this is Nancy Olsen of Quail Ridge Books, a thriving independent bookstore that competes quite well against Amazon. She's right. The playing field isn't level. Traditional retailers and their customers are subsidizing the heavy-handed giant ... and it's already gone on too long.

Re: Amazon cuts off commissions

This is a letter from a respected local business person Nancy Olsen that appeared in today's paper.

The North Carolina legislature will soon vote on a bill to decide if Internet retailers should collect and remit sales tax on their sales in North Carolina. The Internet retailers are fighting this bill because they want to keep the system that gives them an unfair advantage in price over local retailers. Yet they use North Carolina roads to get their products to North Carolina consumers and their packing materials go to North Carolina landfills, all paid for with North Carolina taxes! As a local retailer we have collected and paid North Carolina sales tax and employed North Carolinians for almost 25 years.

We know that the state desperately needs every tax dollar available in these hard times to keep from making even deeper budget cuts in schools, parks, public safety and other necessary programs.

We urge people to contact their state senator or representative and ask them to support North Carolina and level the playing field for local retailers by voting in favor of the Click-through provision.

Re: Amazon cuts off commissions

OK, after all those comments, I guess I did understand the bill after all.

I stand with Amazon.com then. The state of NC is wrong to try and wring this tax out of these types of relationships.

I do NOT think that affiliates are equivalent to physical presences in a state, and I dont think a state is due a referring tax.

Good for amazon.com to stand up to this kind of, frankly in my mind, cheap money grab.

As per my example from below, Amazon.com should pay sales tax for the direct purchase to the originator's state and the commission to the affiliate should be taxed as that affiliate's state income.

Re: Amazon cuts off commissions

Good for Amazon for standing up to the greedy bureaucrats and politicians who want to tax the private sector into oblivion. It seems the citizens of NC have no such say-so for some reason. I see no reason why an affiliate simply posting adds/referrals should be subject or responsible for any sales tax of a sellers or buyers merchandise--they are acting as an advertiser, performing a service. They are already paying income tax on these earnings. This is just another moneygrab by our politicians to keep expanding the state gov, benefits, pork, and security of the politicians and bureaucrats and their cronies at the expense of the private sector--in the middle of a recession and rising unemployment!

Re: Amazon cuts off commissions

This is crazy! We all new this was coming! Someone collect the tax, and let's move on............

Re: Amazon cuts off commissions

The bill actually changes the law to say that if a remote retailer - such as Amazon - has contractual relationships with North Carolina residents to facilitate sales for the remote retailer and those cumlative sales exceed $10,000 then the remote seller is deemed to have a physical presence in North Carolina, would have nexus with North Carolina and therefore Amazon must collect sales tax on all purchases made by North Carolina citizens.

Re: Amazon cuts off commissions

The question becomes whether or not the affiliates that are physically located in North Carolina and acting as sales representatives meet the Nexus standard for having a physical presence in North Carolina. The New York Courts have said that is the case.

Note, that Amazon could voluntarily collect the sales tax in North Carolina as many national retailers that operate an e-commerce site - think Target.com, Wal-Mart.com, Barnesandnoble.com - currently do and have done for some time. You can't tell me they're less sophisticated than Amazon.

Target, Wal-Mart, B&N all have a physical presence in NC and therefore are REQUIRED to collect state sales tax even in their on-line stores. Isn't that easy? Amazon has offics, fulfillment centers and call centers in Arizona,Delaware,Indiana,Kansas,Kentucky,Nevada,Pennsylvania,Texas,Virginia,North Dakota,Washington and West Virginia and they collect sales tax for customers that live in those states. Why? Because they are required by law.

Does my putting up an affiliate link on my website give Amazon.com a significant physical presence in NC? I don't think so.

Finally, imagine if Amazon did the right thing and started collecting the sales tax in North Carolina.

How many of you voluntarily pay extra taxes just because you are in the mood? The right thing for Amazon.com to do is to follow the law. They are not dodging any tax laws, or even bending them.

Their previous policy was according to the law. The law regarding click through business is changing. They have a choice to either collect the taxes or discontinuing their affiliate business in NC. They are choosing to stop that portion of business in NC. That is their choice.

Just as it is the choice of the NCGA and Gov. Perdue to intentionally drive business and money out of this state during our worst economic crisis since I moved here 20 years ago.

Re: Amazon cuts off commissions

"The Supreme Court rulled in Quill v North Dakota that states can NOT charge sales tax on internet purchases if the busines does NOT have a physical presence in the state."

Bzzt. Wrong.

The Supreme Court ruled that North Dakota couldn't force Quill to collect the state's sales taxes from consumers for online sales. Big difference. The sales tax itself (just like ours) is legitimate, it's the method of collection that was in dispute.

Re: Amazon cuts off commissions

The issue of collecting sales tax on purchases from NC citizens would be easy, and yes Amazon would be able to handle the tech just as Walmart.com and Target.com do. However, that is not what the NC "Amazon" Tax is asking. It's asking to collect sales tax based on the referring associate being in NC, not the purchaser. This becomes exponentially more complicated, especially is similar legislation trickles down to the municipal level.

Granted, it's not impossible, because they are already having to do this in NY where the law passed and they didn't pull out in time to avoid it.

A level playing field needs to be created. This will likely require federal involvement to happen. However, will that even be enough? We must remember that this is a World Wide Web we're dealing with. How do we charge state level sales tax on international purchases? Could it be that these complicated issues that create paradoxes and "unfair" situations were the reason for interstate commerce laws being so lenient on sales tax in the first place? (Sorry, that last bit was just my mind wondering on the subject)

Re: Amazon cuts off commissions

The question becomes whether or not the affiliates that are physically located in North Carolina and acting as sales representatives meet the Nexus standard for having a physical presence in North Carolina. The New York Courts have said that is the case.

Note, that Amazon could voluntarily collect the sales tax in North Carolina as many national retailers that operate an e-commerce site - think Target.com, Wal-Mart.com, Barnesandnoble.com - currently do and have done for some time. You can't tell me they're less sophisticated than Amazon.

Amazon seems to want it both ways in that they want to sell merchandise to North Carolina citizens and use the highways and roads of North Carolina to have their products delivered and their packaging to go to North Carolina landfills but they do not wish to help pay for this infrastructure that makes their business model work.

Finally, imagine if Amazon did the right thing and started collecting the sales tax in North Carolina. Maybe North Carolina would not be having to look at raising $990 million in taxes or at least not as much, maybe there would be teacher assistants in third grade classes, maybe those potholes could be fixed, maybe that child on Medicaid could get speech therapy, maybe the playing field would be more level and that store down the street paying property tax, employing people, sponsoring the Little League Team and donating food to the local food bank or buying the yearbook ad would still be open. When is the last time Amazon did any of those things in your community?

Re: Amazon cuts off commissions

Nice that people have opinions, but the fact is that NC wants your money.

Amazon actually has a say - which makes them different from NC people who shut up while state legislators walk all over them and their families. I hope Amazon becomes demonized as a money-hungry company that forced NC into some sort of awkward submission.

That'd mean we're all not like NC people - maybe there's hope out there.

If you're Amazon, you take money seriously, if your from NC, you're going to have trouble grabbin money with one hand while covering the corruption with the other. IE: oh we're so out of money (please don't ask why there was plenty of money for Apple, scandals, illegals... et. al.) Maybe we need Jim Black to get released from prison for a day so he could explain it all to us... again.

Re: Amazon cuts off commissions

A couple of points to consider:

If Amazon caves, they will be exposing themselves to tax liability in hundreds of municipal and county jurisdictions, not just 50 states. And those political boundaries don't follow zip code boundaries. Compliance may not be as easy as you think.

This also opens them to audit by that many jurisdictions.

Re: Amazon cuts off commissions

Correct. They are trying to say that buying through an NC associate link is the same as if someone from CA or any other state came to NC and bought something in a brick and mortar store and had to pay the NC sales tax.

NC based associates do pay in income taxes on their earnings, which is tax revenue that will be lost if they are no longer able to be associates.

And yes, NC consumers should report internet purchases, but this is one of the least policed pieces of legislation on the books (heard this straight from an NC Senator). And how many people really report it?

Re: Amazon cuts off commissions

Wait, I'm guessing I dont understand this very well, because I dont see where the sale is thats supposedly being taxed...

If Customer Bob lives in Virginia, and visits a NC-based website thats an Amazon affiliate member, and he clicks an ad link and ends up making a purchase at Amazon.com, then Amazon.com should pay tax on that sale to Virginia, since its a purchase by a Virginian.

(I know that as of now, thats not really happening, and unfortunately, I guess eventually we'll go down that road. Like in NC, that sale should be declared under our individual tax returns, and is now a percentage-based "estimate"... )

And then, in that same scenario, Amazon.com also pays a small percentage of the sale to the NC website owner under the terms of their affliate program.
That transaction is not a sale, and should be taxed as income for the NC website company or individual, and declared on their tax returns.

As I read it, this new proposed "click through provision" is supposed to make mail-oroder companies like google and amazon pay sales tax because the sale to Customer Bob in Virginia was a referral from an NC-based website?

How in the world is that right?

Please someone correct my reading of what this issue is about...

Re: Amazon cuts off commissions

Everyone needs to take a second and hit the brakes and recognize all parties involved in this whole issue. Here are the players: NC State Legislators, Amazon (and other online retailers nationwide), Consumers, and Affiliates.

Here is the impact and responsibility of each one:

Legislators: working to implement a bill that will collect sales tax on online sales via affiliate links, BUT not on all other channels of online marketing. Thus, putting thousands, if not hundreds of thousands, of affiliates out of work when online retailers (ie Amazon) drop them from their programs).

Amazon: Playing hard ball with NCGA, which has had varying impacts. 1. Upset affiliates and caused income loss. 2. Put legislators on the defensive, viewing Amazon's move as a "threat" against them personally. 3. Put pressure on the NCGA to consider the consequences.

Consumers: Ultimately it has always been the consumer's responsibility to report and pay in sales tax on online purchases as a use tax on annual tax returns. So, for those blaming Amazon for not taking initiative to start collecting sales tax instead of booting affiliates, when was the last time you reported sales tax on items you bought online? Seriously, let's be honest...

Affiliates: Honestly, they're the innocent bystanders and victims for the most part. Sure, they "[could] diversify their revenue channels" as I've read in other places. But at least they are working (or at least trying to) and not being an additional drain on unemployment funds.

In summary, yes Amazon is trying to dodge paying taxes, and as long as they have the option why wouldn't they? Who among you, if given the ability to dodge a portion or all of your income taxes wouldn't, whether it was a gray area loop-hole or not, wouldn't jump at the chance? In fact, haven't tax preparation services become masters at playing the legal boundaries to make sure we get the highest refunds? But there are affiliates who pay taxes on the income that affiliate programs from Amazon and many other retailers, and Amazon pays the taxes they are obligated to.

The arguments for keeping sales tax fair between online retailers and brick and mortar stores are kind of pointless. Brick and mortar stores build a physical presence in a state expecting to pay the sales taxes. It's part of their business plan/model. In the same way, online retailers choose to be online retailers with the knowledge that they do not have to worry about sales taxes in other states. It's just a part of business planning and taking advantages of whatever competitive edge can make you successful as a business.

Just to clarify my stance, I feel that Amazon is using their affiliates as pawns in legislative battles in NC, HI, and CA. I do not agree with playing with someone's livelihood to gain a political advantage. But, I do not think that they are the only ones with responsibility in the situation.

Re: Amazon cuts off commissions

As I understand this, if a person living in California goes to a web-site hosted by an Amazon associate in North Carolina and gets referred to a product which they buy, then North Carolina wants to charge the California resident NC state sales tax? What if the product is bought from a company in Virginia? Am I missing something?

NC already SHOULD be collecting income tax from the associate. The associate isn't actually selling the product, aren't they just referring?

Also, if you are an NC resident, you SHOULD be self reporting Internet purchases that were not taxed and paying something addtional on your taxes for this. You are all doing that aren't you?

Re: Amazon cuts off commissions

Bzzt. Wrong.

The Supreme Court rulled in Quill v North Dakota that states can NOT charge sales tax on internet purchases if the busines does NOT have a physical presence in the state.

Re: Amazon cuts off commissions

Democrats, claim they are for the little guy, but always end up screwing him.

Re: Amazon cuts off commissions

Wait, am I crazy or don't we already pay an estimated tax on items purchased out-of-state every year on our annual tax return?

Re: Amazon cuts off commissions

Amazon is trying to make an example by strong-arming the legislature. They know that in the long run all states will follow NC's example. If you buy in NC, you owe sales tax, thats already the law..

Re: Amazon cuts off commissions

Amazon is way off base here, they are no better than the crooked lobbyists trying to influence the legislature to grease their palms. As a business, you agree to abide by the laws. Using your perceived might to bully those who are your customers gets you nowhere. Once an Amazon customer, I will no longer purchase from their site.

Re: Amazon cuts off commissions

"The website you refer us to http://www.performancemarketingalliance.com/ has nothing updated since May 19th."

This will come as no surprise to those who follow corporate tax evasion techniques, but this "alliance" was incorporated in Delaware. ;)

Re: Amazon cuts off commissions

I'm sure this won't be a very "popular" opinion here, but since the N&O appears to only be concerned with helping Amazon put pressure on the General Assembly, while ignoring the elephant in the living room, here goes:

Amazon and other mail order houses have been engaged in facilitating tax fraud for decades. North Carolina and other states have the right to collect sales taxes on items that North Carolinians purchase while they are within the state. Period. What Amazon and others have done is take advantage of an ambiguous 1992 Supreme Court decision, which, in essence, upheld a previous 1967 decision in Bellas Hess. Pay close attention to the following:

As the Court says, the test whether an out-of-state business must comply with a state levy is variously formulated: 'whether the state has given anything for which it can ask return';8 whether the out-of-state business enjoys the protection or benefits of the State;9 whether there is a sufficient nexus: 'Some definite link, some minimum connection, between a state and the person, property or transaction it seeks to tax.' 10 However this is formulated, it seems to me entirely clear that a mail order house engaged in the business of regularly, systematically, and on a large scale offering merchandise for sale in a State in competition with local retailers, and [386 U.S. 753, 766] soliciting deferred-payment credit accounts from the State's residents, is not excused from compliance with the State's use tax obligations by the Commerce Clause or the Due Process Clause of the Constitution.

It is hardly worth remarking that appellant's expressions of consternation and alarm at the burden which the mechanics of compliance with use tax obligations would place upon it and others similarly situated should not give us pause. The burden is no greater than that placed upon local retailers by comparable sales tax obligations; and the Court's response that these administrative and record keeping requirements could 'entangle' appellant's interstate business in a welter of complicated obligations vastly underestimates the skill of contemporary man and his machines. There is no doubt that the collection of taxes from consumers is a burden; but it is no more of a burden on a mail order house such as appellant located in another State than on an enterprise in the same State which accepts orders by mail; and it is, indeed, hardly more of a burden than it is on any ordinary retail store in the taxing State.

Hopefully you noted this sentence: "on a large scale offering merchandise for sale in a State in competition with local retailers", because it shows that the Court fully understood the true impact that out-of-state mail order houses can have on local, "brick and mortar" retailers. What Amazon does is really a double-whammy: they take away business from struggling retailers here in North Carolina, and they help their consumers dodge vast amounts of state sales taxes.

And for you spurned Affiliates reading this, I do sympathize with you. But you need to understand something: it's not the legislature that's throwing you under the bus, it's Amazon. The revenue you help them generate is a drop in the bucket compared to their total sales from our state, and they will gladly sacrifice you to maintain their unfair advantage over their competition.

There's nothing hard about this for Amazon

They're trying to draw a line in the sand, both here and in New York. But the truth is, the programming required for this is simple and probably already done.

In a recession

Who, when confronted with a deep recession, makes it HARDER to do business in their state?

*boggle*

What is going on in Raleigh? How about making it easy for folks to get jobs and get back to work? No wonder we have one of the highest unemployment rates in the nation. This is what 100 years of Democratic leadership gets ya!

I hope you'll sue Amazon

I'd be happy to join a class action, but don't feel strongly enough to lead it myself.

Amazon sucks

I'm an Amazon associate and this move on their part is nothing more or less than the actions of a bully. Amazon could easily comply with the requirements of the legislation, and they eventually will as more and more states seek to reform and modernize their tax structures.

If you're complaining about the legislature on this issue, you're off base. The culprit here is Amazon and they deserve nothing but scorn.

James

PS For those who are threatening to leave NC, please just go ahead and do it. We'll be just fine without you.

Re: Amazon cuts off commissions

Complaint to Amazon:
Letter of complaint to Amazon.com

Amazon Associates shut down all of their accounts from North Carolina and Hawaii last night at 4 am. In other words, those of us who have referred people to you for years now get nothing for the thousands of links to Amazon on our websites. You gave us no options.

And yes, those links that are embedded in years of programming in our websites will continue to refer people to Amazon.

Amazon has been great to work with over the years. Shipping is fast. The system of ranking products is excellent. But now you have given the people who recommended you the shaft.

You gave us no options. You just shut us down because you don't want to pay taxes? Certainly there is a case for us to take legal action against you for abruptly canceling the program.

The website you refer us to http://www.performancemarketingalliance.com/ has nothing updated since May 19th.

Sadly, this probably affects content mavens like me who recommend quality products. This was my only source of income from my website. A poor doctoral student just got poorer.

Letter of Complaint to North Carolina Legislators:

Find your representatives at: http://www.ncleg.net/GIS/RandR07/Representation.html#byZIP

I'm disappointed that Amazon.com shut down its Amazon Associates accounts in North Carolina at 4 am today.

They write "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." (See email below).

I referred people to Amazon.com on my website because they give great service and have system for reviewing products. Now three years of putting links to them in my website will be gone. I can't go back and change the links--it is thousands of links by hand.

This was a main source of income for me.

Please look into this. This affects poor students like me who depend on the internet for a small source of income each month.

Count me as another unemployed person.

Re: Amazon cuts off commissions

LEAVING THIS STATE IS THE BEST WAY....
JUST THINK:

MOST STATES NO CAR TAX.
NO UTILITY TAX.
MUCH LOWER PERSONAL INCOME TAX.
LESS GAS TAX.
NO OR VERY LOW VEHICLE INSPECTION TAX.
BETTER UNEMPLOYMENT INSURANCE FOR WORKERS.
BETTER SCHOOLS.

AND MANY OTHER ITEMS !

Re: Amazon cuts off commissions

This is part of OBAMAS stimulous plan.It will stimulate businesses to move to another state.

Re: Amazon cuts off commissions

My music blog was affected by this. Our Amazon affiliate account was suspended last night, with a balance left in limbo. While we didn't make a lot of money off the program, there are plenty of people who do and this will impact their bottom line. We've already removed the Amazon ads from our site, but there are dozens and dozens of links with our account code embedded that are now pointless.

The state legislature needs to get its act together and look at who this tax collection program will really affect (ie the "little guy") and if it's worth losing our votes over it.

Cars View All
Find a Car
Go
Jobs View All
Find a Job
Go
Homes View All
Find a Home
Go

Want to post a comment?

In order to join the conversation, you must be a member of dome.newsobserver.com. Click here to register or to log in.
Advertisements