Amazon has shut down its affiliates program in Connecticut and Arkansas over the controversial issue of collecting state taxes.
The company announced the move in letters to affiliates Friday, noting that contracts with all Connecticut residents who participate in the Amazon Associates Program would be terminated effective immediately, while contracts with affiliates in Arkansas will be terminated on July 24.
Affiliates of the Associates Program are typically Web site owners and bloggers who link to Amazon on their sites as a way of driving traffic to the online retailer. In return, they receive a commission if a sale is made.
Though Amazon isn’t required to collect taxes in states where it has no presence, many cash-strapped local governments have tried to force the company to pay taxes in states where affiliates are located. Amazon naturally has challenged that requirement, a move that has forced the company to shut down its affiliate programs as it fights the tax regulations.
The retailer has terminated similar agreements in other states, including Illinois, Colorado, North Carolina, and Rhode Island, and has threatened to do the same in other states where affiliates are located.
In its letters to Connecticut and Arkansas affiliates, the company blamed the budgets signed by the governors of those states that force it to collect tax from online purchases even though Amazon has no physical presence in the states. Because of the new state tax laws, Amazon said it was “compelled” to shut down the affiliates programs.
Great, it looks like I will no longer be an Amazon Associate (if and when Jerry Brown signs the legislation), although I have not realized any revenue yet. But, what about the Californians that do derive their livelihood from Amazon? Well, they lose their jobs.
While federal litigation continues, up to the United States Supreme Court more than likely, the states will add little revenue while hurting its working citizens.
In a recent interview, Amazon CEO Jeff Bezos condemned the drive to collect sales tax, arguing that Amazon is no different than big retail chains that don’t collect sales tax in states where they don’t have what’s known as a “nexus,” or presence. The CEO said Amazon’s point of view is that the collection of taxes among the states should be simplified, referring to a plan called the Streamlined Sales Tax Initiative.