|Thu Mar 11 2010 00:04:34|
Amazon Pushes Back as States Attempt to Tax Online Shopping
By: Ina Steiner
Hungry for revenue, states around the country would like to collect sales tax from residents who shop online, including from sites such as Amazon.com and Overstock.com, and they are introducing - and, in some cases, passing - laws that affect online shopping and content websites.
This week Amazon.com shut off affiliates in Colorado due to legislation enacted in that state. Amazon changed its User Agreement for its Associates (affiliates) effective March 10, 2010: residents of Colorado join those in North Carolina or Rhode Island who are ineligible to participate in Amazon's affiliate program.
The Performance Marketing Association (PMA) has been tracking the issue and posted a notice on its website. Meanwhile, Amazon merchants discussed the issue in a post that includes a copy of the letter Amazon.com sent to its Colorado Associates.
It's a hot-button issue that has small content publishers worry over their affiliate revenue. But state laws around sales tax are likely to impact online sellers as well, as anything that increases costs to consumers can hamper sales.
In many states, taxpayers are supposed to pay sales tax even when online businesses don't collect it - here's an interesting blog post from 3 years ago discussing the issue - what's interesting is that the author put a chart together showing which states have a "use tax." This Wikipedia entry on states' Use Tax is also enlightening, see the section on enforcement.
The Colorado legislation is different from other legislation that has passed or been considered - see this article in the Durango Herald for the details. "The bill gives Amazon and other big Web sites a choice: Either they can collect sales taxes, or they can send their customers a yearly invoice that details how much the customers owe in use taxes."
All eyes will be watching Colorado, and expect other states to follow if it appears to be working.