March 11 – March 18, 2010 Edition

Amazon Ends Colorado Affiliate Program Over New Tax Law

COLORADO/AUTHORLINK NEWS/03/09/ has notified Colorado-based members of its Amazon Associates program that it will no longer offer the program in the state due to new legislation that will impose a sales tax on online retailers.

According to a report in Publishers Weekly, Amazon said in a letter to its associates that while the law doesn’t require online retailers to collect sales tax, the new ruling places an increased compliance burden on online retailers, which in effect induces them to “voluntarily” collect Colorado sales tax, a course the company says it will not take.

Amazon has stopped advertising through its Colorado associates, though it said it will continue to sell to Colorado residents and will advertise through other channels, including through associates based in other states, PW said.

The company also said that if Colorado were to scrap the new law or follows the “constitutional approach to collection,” Amazon would re-instate Colorado-based associates.

A number of states are trying to impose sales taxes on out-of-state e-tailers on the grounds that their associate or affiliate programs constitute a legal nexus for those e-tailers to collect sales tax.

Amazon is appealing New York State’s law that requires the collection of sales tax by out-of-state e-tailers. It is collecting the tax in New York while its appeal moves forward. Last year it ended its affiliates program in North Carolina to avoid collecting a sales tax there.

Amazon’s associate and affiliate programs allows users to earn money from offering the e-tailer’s numerous products on consumers’ blogs and web sites.