Tuesday, March 9, 2010

Amazon Drops Colorado Associates Program

By Jim Milliot  - Publishers Weekly

Reprinted with permission of Publishers Weekly

In a letter sent to "Colorado-based Amazon Associate[s]," the e-tailer said that effective Monday March 8 it was ending its associates program in the state. Amazon cited newly passed legislation aimed at imposing sales tax on online retailers for its decision to end the program. In the letter, Amazon said while the new law doesn't require online retailers to collect sales tax, the new regulations "increase the compliance burden to a point where online retailers will be induced to " 'voluntarily' collect Colorado sales tax--a course we won't take."

Because of the legislation, Amazon has stopped advertising through its Colorado associates, although it said it will continue to sell to Colorado residents and will advertise through other channels, including through associates based in other states. The company said it is not opposed to collecting sales tax "within a constitutionally-permissible system applied evenhandedly." If Colorado scraps its new law or follows the "constitutional approach to collection," Amazon said it would "welcome the opportunity to reinstate Colorado-based Associates."

The flap in Colorado is just the latest in the battle between Amazon and other online retailers and states that are imposing sales tax on out-of-state e-tailers by determining that associate or affiliate programs in a state constitutes a legal nexus for those e-tailers to collect sales tax. Amazon is challenging New York State's law that requires the collection of sales tax by out-of-state e-tailers and last year it ended its affiliates program in North Carolina rather than collect a sales tax. It is collecting the tax in New York while its appeal moves forward.

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