Amazon May Sever Ties With U.S. Affiliates Over Tax Dispute

By Erin Harrison May 18, 2011

In the face of potential tax law changes, could cuts its partnerships with Web operators that collect fees for driving traffic to the online retail giant.

According to a Reuters report, lawmakers in several states, many of which face huge budget deficits, argue that “Amazon has a duty to collect tax because its ‘affiliates,’ or independent Web operators which are paid a fee when they drive traffic to Amazon that results in a sale, operate in the state.”

Amazon Chief Executive Jeff Bezos said this week that could cut its partnership with affiliates in more U.S. states that require the online retailer to collect sales tax.

Bezos told the ShopSmart Shopping Summit in New York this week the online retailer would cut ties with affiliates who pass such laws.

“We will continue to drop states who pass those affiliate laws, from the affiliate program,” Bezos said in the Reuters report.

Earlier this month, Connecticut became the sixth state with an “Amazon tax” law that requires Internet retailers to collect and remit sales tax if they generate sales through in-state website affiliates, Internet Retailer reported.

Nine other states are considering similar laws, according to Daniel Schibley, a state tax expert at CCH Inc., which are: Arizona, California, Hawaii, Massachusetts, Missouri, Minnesota, Tennessee, Texas and Vermont.

Bezos argues that his company plays by a different set of rules from bricks-and-mortar retailers that sell goods over the Internet.

“Our point-of-view on this is that we should simplify the sales tax system, and we’ve been insisting on this for 10 years. We support the streamlined sales tax initiative, and 22 states have signed on. The right way to fix this is with federal legislation,” Bezos told Consumer Reports on May 11. “Sales tax is very complicated. We’re no different from big chains of retailers. They don’t collect sales tax in states where they don’t have nexus either. So everyone is following the same rules.”

Want to learn more about the latest in communications and technology? Then be sure to attend ITEXPO West 2011, taking place Sept. 13-15, 2011, in Austin, Texas. ITEXPO offers an educational program to help corporate decision makers select the right IP-based voice, video, fax and unified communications solutions to improve their operations. It's also where service providers learn how to profitably roll out the services their subscribers are clamoring for – and where resellers can learn about new growth opportunities. To register, click here.

Erin Harrison is Executive Editor, Strategic Initiatives, for TMC, where she oversees the company's strategic editorial initiatives, including the launch of several new print and online initiatives. She plays an active role in the print publications and TechZone360, covering IP communications, information technology and other related topics. To read more of Erin's articles, please visit her columnist page.

Edited by Jennifer Russell

Executive Editor, Strategic Initiatives

Related Articles

Bloomberg BETA: Models Are Key to Machine Intelligence

By: Paula Bernier    4/19/2018

James Cham, partner at seed fund Bloomberg BETA, was at Cisco Collaboration Summit today talking about the importance of models to the future of machi…

Read More

Get Smart About Influencer Attribution in a Blockchain World

By: Maurice Nagle    4/16/2018

The retail value chain is in for a blockchain-enabled overhaul, with smarter relationships, delivering enhanced transparency across an environment of …

Read More

Facebook Flip-Flopping on GDPR

By: Maurice Nagle    4/12/2018

With GDPR on the horizon, Zuckerberg in Congress testifying and Facebook users questioning loyalty, change is coming. What that change will look like,…

Read More

The Next Phase of Flash Storage and the Mid-Sized Business

By: Joanna Fanuko    4/11/2018

Organizations amass profuse amounts of data these days, ranging from website traffic metrics to online customer surveys. Collectively, AI, IoT and eve…

Read More

Satellite Imaging - Petabytes of Developer, Business Opportunities

By: Doug Mohney    4/11/2018

Hollywood has programmed society into believing satellite imaging as a magic, all-seeing tool, but the real trick is in analysis. Numerous firms are f…

Read More