So this morning I get into the office and find the below notice from Amazon. I appears that the Colorado lawmakers are bound and determined to drive start up companies like my own out of the state.
You know in a well run government taxes should actually go down. The continuous increase of taxes indicates that our lawmakers have no idea what they are doing.
This is particularly scary because if my entire business model revolved around Amazon affiliate sales I would just about be out of business. This is a living example of why it is so important to diversify your business.
If you are in Colorado and this effects you I highly suggest you email your representatives.
Members of the General Assembly
Governor Ritter signed the bill into law.
Dear Colorado-based Amazon Associate:
We are writing from the Amazon Associates Program to inform you that the Colorado government recently enacted a law to impose sales tax regulations on online retailers. The regulations are burdensome and no other state has similar rules. The new regulations do not require online retailers to collect sales tax. Instead, they are clearly intended to increase the compliance burden to a point where online retailers will be induced to “voluntarily” collect Colorado sales tax — a course we won’t take.
We and many others strongly opposed this legislation, known as HB 10-1193, but it was enacted anyway. Regrettably, as a result of the new law, we have decided to stop advertising through Associates based in Colorado. We plan to continue to sell to Colorado residents, however, and will advertise through other channels, including through Associates based in other states.
There is a right way for Colorado to pursue its revenue goals, but this new law is a wrong way. As we repeatedly communicated to Colorado legislators, including those who sponsored and supported the new law, we are not opposed to collecting sales tax within a constitutionally-permissible system applied even-handedly. The US Supreme Court has defined what would be constitutional, and if Colorado would repeal the current law or follow the constitutional approach to collection, we would welcome the opportunity to reinstate Colorado-based Associates.
You may express your views of Colorado’s new law to members of the General Assembly and to Governor Ritter, who signed the bill.
Your Associates account has been closed as of March 8, 2010, and we will no longer pay advertising fees for customers you refer to Amazon.com after that date. Please be assured that all qualifying advertising fees earned prior to March 8, 2010, will be processed and paid in accordance with our regular payment schedule. Based on your account closure date of March 8, any final payments will be paid by May 31, 2010.
We have enjoyed working with you and other Colorado-based participants in the Amazon Associates Program, and wish you all the best in your future.
Best Regards,
The Amazon Associates Team
{ 29 comments… read them below or add one }
Opened my business mail this morning and got the same notice. Very frustrating in a down economy, living on the Western Slope of Colorado trying to raise a family and coming out of a hard winter. Colorado State revenue is more important to our government than the families that keep it running.
I highly suggest you also email Amazon – this is a ridiculous decision on their part. Punishing their affiliates for living in Colorado, despite the sales generations we do for them, has to be the absolute worst idea I’ve ever heard. Overstock.com is doing it too.
What this comes down to, in my mind, is that those of us who have been generating income for ourselves – and for Amazon – just got double penalized.
Let’s make sure Colorado’s legislators understand they are hurting one of the key industries in our state. I put a screen shot of the Amazon lockout email here: http://www.empisys.com/amazon-shutsdown-colorado.html
Anne – I completely agree. The state is more concerned about balancing their budget than creating more local jobs. It’s a real shame.
Dena – I’m lucky that the Amazon income is only from two different sites. However if this sort of thing catches on with other revenue streams like Adsense, CPA and electronic products it’s gonna get ugly.
Unfortunately Cary I think this is just the beginning. State Governments are so desperate to raise money any way they can (instead of looking first to cut costs) that I think this kind of thing will continue.
I am furious over this as I, of course, received the same notice this morning. Over the last several weeks, I have spent God knows how much time setting up my Amazon affiliate account, working with my software company to make sure a widget works well with my site, blogging and promoting some products, etc. Amazon products would have been a wonderful addition to my site and especially for my customers.
Meanwhile, I just received a new affiliate marketing book from Amazon last week as I plan (or planned?) to add other affiliate accounts to grow my online store. Wonder if I should return the book because it sounds like it may be useless to me?!
Jeez, isn’t it enough that Coloradoans are to pay taxes on our earnings from affiliate accounts?
I will definitely be writing the governor’s office once I find out how many Colorado affiliates have had their accounts closed. I’ve requested this number from Amazon and hope they will disclose at least the approximate number to me.
I’m also afraid that other companies with affiliate accounts will follow Amazon and penalize us the same way, with the attitude “What’s good for Amazon’s good for us.”
In response to my email to Amazon attempting to explain to them that this was an unfair decision and didn’t actually hurt Colorado lawmakers in any way, this was the response… doesn’t look like they even read it. At this point, if Amazon changed their decision – I still wouldn’t go back. I will no longer purchase from Amazon, or communicate with them in any way. I will send the last redemption gift certificates back to them – I don’t want them. I will encourage my friends and family to patronize other businesses as well. When the “Top 5 Business Blunders” article comes out with Amazon’s decision at the top, I’ll smile quietly.
“Hello,
We share your concerns about the Colorado legislation and we appreciate your position as a former Associate in that state.
As we stated in our prior email to you, we and many others strongly opposed this legislation, known as HB 10-1193, but it was enacted anyway. Regrettably, as a result of the new law, we decided to stop advertising through Associates based in Colorado. We plan to continue to sell to Colorado residents, however, and will advertise through other channels, including through Associates based in other states.
There is a right way for Colorado to pursue its revenue goals, but this new law is a wrong way. As we repeatedly communicated to Colorado legislators, including those who sponsored and supported the new law, we are not opposed to collecting sales tax within a constitutionally-permissible system applied even-handedly. The US Supreme Court has defined what would be constitutional, and if Colorado would repeal the current law or follow the constitutional approach to collection, we would welcome the opportunity to reinstate Colorado-based Associates.
You may express your views of Colorado’s new law to members of the General Assembly and to Governor Ritter, who signed the bill.
We appreciate your understanding.”
Jean unfortunately I would agree that things will go from bad to worse. As much as this sucks it was an eye opener for me and I am now thinking of ways to mitigate such issues in the future.
Thanks, Cary. I guess I should consider myself lucky in that I learned right from the very first affiliate account I tried without investing more time and effort. Thought I could do no wrong with the giant here, but apparently not!
BTW, I subscribed to your RSS feed, so I look forward to learning how you’re going to mitigate these type of issues in the future, if you share your thoughts.
Dena: looks like the standard form letter you got, and they obviously do not care. I posted to another blog with your response and was wondering where you got that 4200 figure?
I’m sorry, but I still have to write the governor’s office and have my say. Of course, I tried clicking on Bill Ritter’s link from the Amazon firing e-mail to affiliates and the link did not go through. And if you all heard about his bike accident recently, maybe Karma’s already paying him back for signing that bill! Ouch!
I got that from another article on this subject, but I honestly can’t find it again now. One of the Denver news stations is doing a story tonight – hopefully they will have more information. It seems that any “uproar” that this has caused is because CO signed the bill in the first place, not to Amazon’s reaction to the law.
I think we should all write the governor – but we should also write Amazon. This entire situation just makes me shake my head in wonder.
I submitted a rant to 9News this morning and I also emailed Governor Ritter.
I’m working up an email to Amazon right now but I can imagine it will fall upon deaf ears.
I’ll be tuning into the news this evening to see what they have to say!
Of course it will. CBS4 has something about it on their website and on their FB page, but in my opinion it’s too much about the law and not enough about Amazon. They are two different stories in many ways, and deserve equal time spent on each. And, according to CBS4, New York and North Carolina “have passed (or are close to passing) similar laws. In both cases, Amazon ended its affiliate programs in those states.”
My hope is that everyone who reads this realizes that Amazon, and other companies taking or considering taking the same action, don’t deserve our business. I hope they take a huge profit loss because of their irrational decisions. I also hope the national news wires decide that this story, and others like it, deserve some attention.
Dena I completely agree. I liked shopping at Amazon because of their “One Click” shopping but now I will most definitely think twice about shopping here.
I have to say I was disappointed in the coverage from channel 7 – hopefully the other two will do better. There is a difference between our new law and those in other states – ours doesn’t make affiliates into virtual brick-and-mortar stores like other laws do – no one seems to be mentioning that aspect of the bill.
I just caught some of 9 News and didn’t see anything. Maybe they will have something about it at 9pm.
When I first got this email this morning, I was angry at the Colorado legislature, too. But the more I thought about it, the more it became clear to me that dumping their affiliates was Amazon’s decision, not Colorado’s. They are obviously trying to force lawmakers to change a law that has already been passed — their strongly worded email, with its suggestion to contact Governor Ritter and the General Assembly, made that perfectly clear.
In my opinion, no corporation has any right to influence the law in this manner. There are the proper legal channels to go through if you think a law is unconstitutional, but what they are doing is different — they are trying to strongarm the Colorado legislature into doing what they want, by throwing us under the bus.
The thing is, this isn’t the first time. A couple of years ago, Amazon tried to bully all POD publishers and self-published authors into using their printer if they wanted to sell their books on Amazon.com. Hello, can we say monopoly? A POD publisher called Booklocker sued them under the antitrust laws, and won a settlement just a couple of months ago, I believe. Then in January, Amazon tried pulling all of MacMillan’s titles (they are one of the biggest publishing companies) in order to force them to sell their ebooks at $9.99 or less. MacMillan refused, and Amazon had to give in — because of course they didn’t really want to lose all that business.
In my opinion, Amazon is getting too big for its britches. They are trying to use their size and influence to wield power beyond what a corporation ought to have. That’s why this little stunt of theirs has caused me to part ways with Amazon forever. I won’t be buying from them anymore, and I am switching to another affiliate program, even if they restore their Colorado-based affiliates — which I expect they will.
Katharine,
I couldn’t agree with you more. My issue, at this point, is finding another affiliate program for books that will still allow my website to run in a similar manner as it does now. Borders and B&N don’t do product specific ads from what I’ve been able to find. I want to list individual books with individual links, not sell a gift card as a generic banner at the top of my page. Perhaps there is something out there, but as of yet I can find it. Perhaps someone will take note and create the market some of us are looking for.
As far as I’m concerned, I’m writing off Amazon as well – I’m done with them just as you are.
And BTW – very well said!
Exactly. I would think someone would want the “seasoned” sellers with a proven track record.
Does anyone know, has Overstock followed suit?
To my wonderful brothers and sisters in the great state of Colorado:
I feel your pain. My state, NC, got the boot last summer. That really, REALLY bothered me. In fact, one of the big name guys in Cary (http://online.wsj.com/article/SB124603593605261787.html) actually talked to me on the phone about this…he was banking $80,000 in amazon product revenue a year alone. Now that’s gone. I was going to create niche sites, make amazon revenue, but now that is a done deal. The only way you can get around this is to try other affiliate networks and follow Cary’s lead. Diversification IS key and I hope and pray that there will be loyal affiliate companies out there who will stick it out with us.
The nexus bill that was passed in NC meant Amazon was going to have be taxed for Amazon associates selling their products online. They bailed and the NC legislature passed the nexus bill. At one time, I thought it would be ok to sign up for Amazon UK (which I did) and sell products, but selling in pounds for one and the potential tax implications for two made me drop that thought. And yes, Overstock.com will come after you as well; they did this with us in NC. They will do it in CO.
I feel your pain, CO. This is sad and sick in my opinion. I have always believed that when you work hard, and you work from home, that the tax deductions and profits help bring Americans MORE money in income which in turn helps stimulate the economy with imminent spending. If we protect our businesses (LLC, S-Corp, etc.) we can earn even more money and save. But I am concerned that even these rights might one day be held hostage. Lower taxes and Americans having more economic freedoms by working hard will bring in more money, create jobs, and help the state economy (shouldn’t that be common “cents”?). Why would we, as affiliates, who love online marketing, commence becoming misers and hoarde our hard-earned money? No, we would save it and spend it. We would eat out, pay for products in the county, travel in our state and give freely as we feel led to give. This, to me, is the American way. It’s sad that the biggest name in the online marketplace is starting to pull out of states like NC and CO. Other states need to decide how they will respond.
If someone comes up with a blog (monetized with adsense of course
) that talked about our disappointment with these new rules in place, perhaps we could get a lively, national discussion going and raise awareness. Having a home business on a laptop should still be a dream that many of us can live out…and I pray that states don’t take the right to earn off of it away.
God bless all of you in beautiful Colorado
! Come visit NC anytime.
Will
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John 3:30
perhaps those of you who are mad at amazon instead of our colorado lawmakers didn’t read this part of the bill ?? i’m mad that i’ve lost 2 stores today, but our ridiculous law caused it, not all national online retailers. I applaud amazon.com for trying to protect our privacy ! and refusing to bow down to this extortion-like action. by the way i just read the whole bill and it appears it will soon affect all purchasers in colorado, NOT just affiliates. we should all stand up and write our state assembly members about this matter.
“To help enforce the law, the bill would allow the state Dept of Revenue to ask online retailers with annual sales of more than $100,000 to provide a list of what each Colorado resident bought in the previous year. Opponents say that could violate the privacy of customers if retailers have to list details of what books, for example, were purchased. But Phil Horwitz, the department’s tax policy director, said he thinks most retailers would simply choose to collect the tax to avoid the more unpleasant option of having to send tax notices to their customers.”
Dena, are you set up yet with the Google Affiliate Network/B&N? I got set up with them yesterday and I can help you make links to individual pages if you’d like. I already love B&N/Google Affiliate Network! Seems like Amazon just did me a favor by forcing me to switch.
Amazon is clearly trying to send a message at the expense of CO affiliates. But, that message is not to the CO legislature or governor; it is to the politicians in the 46 states who have not yet passed similar laws!
Amazon does not want to collect sales tax for every state. Not for the technological burden, which they (unlike 99% of e-commerce sites) have the resources to tackle, but because sales tax hurts its price advantage. Amazon is becoming the world’s #1 discount retailer. These discounts start with the 6-10% sales tax “savings”.
As a consumer, I like the option of saving on sales tax. As a CO affiliate, I don’t blame Amazon. NY’s action and Amazon’s reaction over a year ago made it clear that Amazon would do this. It seems it’s always amateur hour in Colorado; perhaps it’s because we don’t spend enough on public education? Perhaps it’s because there are too many legislatures “born and raised in Colorado” who haven’t seen how the rest of the world works? Either way, they were morons on this one. All these affiliates lost their income from Amazon. Colorado just lost its income tax revenue on this income, and hasn’t increased state sales tax a single penny.
I think things will go worse in the future. You can expect more States to follow soon…
I ran across this today on the Commission Junction Web site. Read the 2/9/10 note for Colorado. http://www.cj.com/news/internet_tax.html
Some more good news for affiliates using Clickbank in Colorado.
http://www.clickbank.com/blog/2010/03/16/clickbank-sticks-by-colorado-affiliate-marketers-despite-new-tax-law/
I received about 50 emails like that from Commission Junction today. I’ve enclosed a copy of the email below:
“Dear XXXX,
Due to the recent tax laws regarding nexus involving online affiliate publishers in the state of Colorado (legislation known as HB 10-1193) we will no longer be able to accept new publishers from Colorado into our affiliate program.
Additionally, we will be immediately terminating our relationship with any publishers located in Colorado that were already joined. We sincerely apologize for the abrupt interruption in the program if this affected your account directly. This, unfortunately, affects our ability to continue business with loyal publishers and we understand that we are losing valuable relationships due to these new laws.
If you are a publisher located in Colorado, your publisher account will be closed as of May 18, 2010, and we will no longer pay advertising fees for sales referrals after that date. All sales made prior to May 18, 2010 will be credited to you and paid out in accordance with our regular schedule on June 10, 2010. Please accept our apologies and we appreciate your understanding. Hopefully in the future, these laws will be reversed in order to keep the networks diversified and growing.
Kind Regards,
XXXXXXXX”
According to the state of Colorado, the law states that outside retailers have to notify the State of Colorado and the customer of what they spent, so that the state of Colorado can collect the money. It doesn’t make any difference if they have affiliates in the state or not, if they make any sales in the state, then they have to report the sale.
http://cclponline.org/pubfiles/Amazon%20fact%20sheet%203_9%20final.pdf
As an affiliate who does NOT live in Colorado but who can still sell to consumers in Colorado, maybe I should write the Governor and thank him for passing a law that just ELIMINATED all my affiliate competitors in his state!
Actually, I think the law SUCKS! If I were an affiliate marketer who DOES live in the state of Colorado, and I had a list of BUYING customers who live in Colorado, I’d probably be thinking about selling that list to affiliates living OUTSIDE Colorado. It won’t generate as much as an ongoing relationship with those customers but at least you might recoup some of your investment.
As for Amazon, Overstock, CJ and others, I don’t blame them for the actions they are taking.
If I were a Colorado affiliate who was making a “significant” amount of money selling to consumers in Colorado, I might also consider creating a Nevada or Wyoming corporation in order to continue to sell to a lucrative market.
Just some random thoughts….