Online retail giant Amazon.com notified web-based affiliate businesses across Colorado on Monday that it is dropping them in response to an eight-day-old state law applying state sales tax to such purchases.
Amazon.com Inc. (NASDAQ: AMZN) has a national network of bloggers and Internet-based businesses that generate commissions themselves by driving sales from links on their websites to Amazon.com
The Colorado Legislature passed a law that, starting March 1, requires retailers to notify purchasers how much money they owe from Colorado’s 2.9 percent state sales tax when their purchase originates from a business based in the state. Retailers are also supposed to pass that information to the state so it can collect the revenue.
Bloggers began posting copies of the Amazon.com letter, which said the company will continue to sell to Colorado residents online but will not longer market through online Colorado affiliates.
“We plan to continue to sell to Colorado residents, however, and will advertise through other channels, including through associates based in other states,” concluded the letter, as posted by tech blogger Nat Torkington.
Colorado Gov. Bill Ritter — who signed the Internet tax bill into law — issued a statement Monday criticizing Amazon.com’s move.
“Amazon has taken a disappointing – and completely unjustified – step of ending its relationship with associates,” Ritter said. “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,” Ritter added. “Amazon’s position is unfortunate, and Coloradans certainly deserve better.”
Amazon.com’s reaction may have come as something of a surprise.
Affiliate marketing businesses in Colorado succeeded in getting an amendment to the original version of the bill, which could have made online business directly responsible for the tax. The affiliate marketing victory crowed about the amendment as a victory.
But now, with several other states debating laws applying sales taxes to affiliate sales, it appears Amazon.com isn’t happy about the measure.
The company has not responded to Denver Business Journal requests for comment.
