Amazon.com cut ties with its Colorado affiliate marketers on March 8 after
the US State forged ahead with its plan to introduce a mandatory Internet sales
tax on e-businesses with an annual turnover exceeding USD100,000.
The measure voted on in the state Senate in February 2009, and introduced
this month, obliged large providers of goods via the internet, and their marketing
affiliates, to transmit sales statistics to the state, so that the Colorado
state tax authorities could levy the 2.9% sales tax on purchases by Colorado
consumers.
The bill was introduced as a first step to increasing sales tax compliance
by Colorado taxpayers using the Internet to purchase items. Colorado is not
the first state to implement such a move; authorities elsewhere have been unsuccessful
in getting e-commerce giants to automatically levy and remit taxes due.
Initially the bill had been drafted to tax purchases clicked through via affiliate
marketers but this was later dropped on the grounds that online retailers such
as Amazon and Overstock had cut ties with affiliate marketers in three other
states where this was tried.
Despite amending the proposals, Amazon cut its commercial ties with Colorado’s
affiliate marketers on March 8, stating in a email to members of its associates
program that “as a result of the new law, Amazon has decided
to stop advertising through associates based in Colorado."
In response, Colorado authorities condemned the move as a “hostage-taking
ploy”, questioning the firm’s reasoning for disbanding its Colorado
marketers. "It's blackmail, it's flat-out blackmail," Jack Pommer,
a Democrat representing Boulder and author of the original bill, was quoted by the Denver Post as saying.
"It shows the lengths to which
they'll go to keep the advantage they have over other local businesses," he retorted.
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