Amazon Affiliates - New York State

The war between Amazon and New York state has left Amazon affiliates in a lurch. Well, not a lurch. Amazon just reacted to the tax efforts of New York by terminating every single affiliate!

There is a war going against the web and most people don't realize it. Who is involved and what is it over? Well, one needs just look around to get a big hint. States are dead broke. They are looking for money. One way they are trying to generate revenues is by arguing that online sales to people in their state should produce sales tax. New York state has been at the forefront of this brawl and Amazon has been fighting back with all its might.

Let's assume I own a bookstore in Brooklyn. When people walk in and buy a book, they have to pay the price of the book plus the sales tax on it. Now assume I am Amazon.com. If that same person goes online and buys a Kindle from the site, they are not charged New York sales tax. New York thinks this should occur. Amazon argues the state doesn't have any jurisdiction over it and thus no tax is due. Amazon also correctly argues the burden is to high if it has to file sales tax for every different state, county, city and town across the country. It would literally result in thousands of tax forms a week.

New York is not the only state trying this, but it was the first to push things to a final conflict. The state politicians tried a risky, stupid strategy. They wrote a law that said that if an online site has any affiliates in the state and even a single affiliate sends traffic that produces any revenue, the online company will be considered to have automatically submitted itself to jurisdiction. This, in turn, means the site must collect and pay sales tax.



As you might imagine, the larger online companies went ballistic. They first filed lawsuits over the matter, but New York courts refused to overturn the law. The matter is something that will really have to be decided by the US Supreme Court, but nobody wants to wait that long. So, what did Amazon do? They terminated all their New York affiliates. Just like that.

There are no longer any Amazon affiliates in New York state. Instead of generating revenues, the politicians in New York actually ended up putting a bunch of their small businesses out of business.

And people wonder why government doesn't work!

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