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Amazon Removes Colorado Affiliates and Why

I woke this morning to news that Amazon has removed Colorado Affiliates. Although I am still waiting to confirm this news I received two copies of the email received by two different Affiliates in Colorado.  No doubt this will surprise a few affiliates this morning, but  it shouldn’t.

Amazon had been very clear that they would terminate Affiliates in any state who passes nexus or online tax. They, along with other merchants, feel that the new nexus laws are unconstitutional and that we need to have a fair and constitutional approach.  I am not passing judgment or voicing opinion on their decision to remove affiliates, just stating facts.

Dear Colorado-based Amazon Associate:
We are writing from the Amazon Associates Program to inform you that the Colorado government recently enacted a law to impose sales tax regulations on online retailers. The regulations are burdensome and no other state has similar rules. The new regulations do not require online retailers to collect sales tax. Instead, they are clearly intended to 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.

We and many others strongly opposed this legislation, known as HB 10-1193, but it was enacted anyway. Regrettably, as a result of the new law, we have decided to stop advertising through Associates based in Colorado. We plan to continue to sell to Colorado residents, however, and will advertise through other channels, including through Associates based in other states.

The law passed in  Colorado (HB 1193) is the most extreme one that has passed so far. Remember, I am not a lawyer or an accountant so you need to seek professional counsel. More or less it says collect or send yearly statements to Colorado residents and to the Department of Revenue that summarizes their purchases. From the very beginning this version bothered me; this is a big burden to merchants, small or large.

 Some are expressing confusion of the decision to remove Colorado Affiliates from programs.  Some of this comes from only reading one viewpoint; the words “victory” and “affiliate tax in Colorado is dead” were widespread. Rather than reading the bill some may have relied on someone’s interpretation.  For the past couple of weeks I urged merchants to seek counsel of lawyers and accountant before taking action and before taking no action. I am sure Amazon made good use of the legal counsel and they have made the decision that is right for them. They are also sticking to their guns in removing Affiliates in states passing nexus laws or online sales tax laws they feel are unconstitutional.

Never put your business in the hands of any one else.  Read different opinions and retain professional counsel before making  business decisions.

Fortunately, the two Affiliates who emailed me are well prepared. When this all began I told them to identify replacement merchants for every niche, for every product in order to minimize the impact. These affiliates never stopped preparing. Although they  were also working on the legislative action, they kept preparing their  business model and never put their business at risk.

Sometimes the best approach is to prepare for the worst and hope for the best. It’s not pessimism but realism.

Any Affiliate in Colorado  (or anywhere) is welcome to contact me for assistance on recovering or preparing.  The reality is this,  at any given time an Affiliate can be removed from a program at any time, with little or no notice.

{ 8 comments… add one }

  • Mike Gates March 8, 2010, 12:30 pm


    I too received an email from Amazon today, letting me know that I am no longer an affiliate. Thankfully I am not receiving much income from Amazon.

    It is good to spread your income out among several affiliate programs. But, are other affiliate networks going to follow Amazons lead and terminate Colorado affiliates? I see nothing good coming from this.

    Our best hope is to survive until the next election, when we can vote supporters of this ill conceived bill out of office, and hopefully repeal it.

  • UltraRob March 8, 2010, 3:47 pm

    I also got the email this morning. Amazon is a small piece of my revenue so it isn’t big for me but some other merchants are. Does incorporating in another state get around it?

  • Melanie March 8, 2010, 4:49 pm

    Thanks for stopping by Mike & UltraRob. I am sorry you have been put in this situation but am relieved that Amazon was only a small part of your income.

    Although I am not a lawyer based on what we were told here in NY, that would not remove the nexus, plus it could open you up to legal issues. Besides, the law in Colorado is not really based on nexus. All of which makes this a curious move.

    If I can help with anything be sure to let me know.

  • Ted P March 8, 2010, 6:19 pm

    Sad, but I think it’s more about posturing now on both sides then thinking about the effects of this tax fight. But I can see why Amazon doesn’t want to give in.

    I’ve stopped shopping at Amazon too, not because I’m mad( being a Co. affiliate, )but I don’t like the fact that Amazon might starting sending details of my purchases around. Plus I can usually find most items somewhere else just as cheap. (using my self-referral discount).

  • Robert B March 9, 2010, 1:13 am

    Did you know?……….
    1) That this bill only passed by one vote in the state House and that there were only 4 dissenting Democrats that were against the legislation (Party Politics at its best).
    2) That this affects not only associates connected to Amazon, but also associates connected to any other company (like Overstock.com) that decides to take the same action in response to the new law that Amazon did?
    3) That other state governments will eventually follow suit. State governments are so desperate to raise money any way they can (instead of looking first to cut wasteful spending) that I’m afraid this kind of thing will continue.
    4) Colorado isn’t the first state to do this, because other states have already enacted similar laws. According to Denver Fox 31; New York, Rhode Island, Connecticut and North Carolina have passed (or are close to passing) similar laws. In those states, Amazon will or already has ended its affiliate programs.
    Governor Ritter responded in an interview with Denver CBS4 that, “Amazon has taken a disappointing and completely unjustified step of ending its relationship with associates. While Amazon is blaming a new state law for its action, the fact is that Amazon is simply trying to avoid compliance with Colorado law and is unfairly punishing Colorado businesses in the process. My office worked closely with Amazon’s affiliates and associates to modify House Bill 1193 to specifically protect small businesses, avoid job losses and provide a fair, level playing field for on-line retailers and Main Street, brick-and-mortar retail shops alike. Amazon’s position is unfortunate, and Coloradoans certainly deserve better.” Well, I’m disappointed that he signed the stupid legislation in the first place because it won’t make any difference to the budget deficit in Colorado. They shouldn’t have gotten the state into this trouble in the first place and they should be making cuts in wasteful spending instead.
    Amazon behaved like a rational company in the face of government regulation that had no upside for them and substantial downside. They are not based in Colorado and should not be forced to comply with these reporting requirements. Also, this has zero impact on consumer purchasing activity as this doesn’t impact the end customer of Amazon products in any way.
    On the other hand, there are those that think that Amazon is going after the affiliates even after the affiliates were exempted from the legislation. Those who hold to this opinion just don’t understand the Constitution of the United States which allows for companies NOT based in a certain state to NOT charge a sales tax. Amazon is not based in Colorado as well as many other online giants. So I applaud Amazon for the stand they are making for their rights under the Constitution of the United States. Wake up America (and legislators in our states), it’s a brand new world now with the internet and it is only becoming an even bigger influence every day as brick and mortar businesses are beginning to understand. In case you haven’t noticed, these same businesses are expanding their sales to the internet as well (and not charging sales tax either).
    I have emailed my opinion to each of the legislators as well as the Governor. I would suggest that everyone do the same until their stupid server breaks down so that they have to fix it which will drive the state further in debt!! Maybe THEN it might just sink in that they made the wrong decision in passing this piece of legislation.

  • Jim Bruce March 9, 2010, 8:50 am

    I think that about every Amazon affiliate in Colorado wrote about this on their blogs yesterday… Amazon has a lawsuit going with the state of New York… They believe that these bills are unconstitutional under US law… In some ways, I have to applaud Amazon for standing up for their rights as a business, but they state that they will still do business with Coloradoans and ship products into the state… So, why drop their affiliates in protest if they are still trying to make money from Colorado? In Rhode Island, the state actually lost tax revenue and income tax revenue from affiliates… Now they have a bill in their legislature to repeal their Amazon tax law so they can start making up for the revenue loss that their bill caused… Colorado should quickly follow RI’s example before this bill adds to their budget deficit problems…

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