Amazon Terminates Affiliates In
Nexus Sales Tax States

By Joe Waynick
September 25, 2011

The nexus sales tax threatens to change the economic landscape for Internet booksellers on a national scale. Online retail giant Amazon.com is leading the fight against states that have passed legislation to tax Internet sales.

Amazon currently collects taxes in the five states in which it maintains stores or offices. Those states are New York, Kansas, North Dakota Kentucky, and Washington.

On The Chopping Block

However, in the following nine states that have passed nexus legislation where Amazon claims it doesn’t have a physical presence, Amazon has terminated all of its affiliate relationships in retaliation to what it calls burdensome eCommerce sales tax laws it finds unconstitutional:

  • Arkansas
  • California
  • Colorado
  • Connecticut
  • Hawaii
  • Illinois
  • North Carolina
  • Rhode Island
  • Texas

Consequently, tens of thousands of Amazon affiliates have been deprived of income derived from referring customers to Amazon products. Many of those sellers received most of their livelihood from affiliate sales and found themselves with no means of replacing the lost revenue.

Reportedly, a number of affiliates have vowed to leave affected states to more business friendly locations. Amazon has promised to reinstate affiliates who relocate to nexus neutral states.

Other affiliates are outraged at Amazon for battling states by cutting them off. Danny Sullivan has been a vocal critic of Amazon for terminating the California affiliate program. He very eloquently vents his anger in an open letter to Amazon CEO Jeff Bezos.

The struggle is far from over and ultimately congress and/or the United States Supreme Court will have to decide the issue.

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