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Filed under: News

Overstock kills affiliate programs in 4 states, just like Amazon

Overstock.com affiliate program
Amazon isn't the only company ending its affiliate programs in a handful of US states in an effort to avoid being forced to collect sales tax in those states. The Wall Street Journal reports that Overstock.com has shut down its affiliate programs for California, Hawaii, North Carolina, and Rhode Island.

Each of those states has either adopted or is about to adopt a law that would require online retailers with in-state affiliate partners to collect sales tax on items sold. The idea is that a web publisher who posts links Amazon, Overstock, or other web stores and gets a commission for items sold through those links is essentially giving the online store a physical presence in the state, which means state tax laws come into play.

On the one hand, states are struggling thanks to the recession, and it makes sense that some states would turn to this tax as a revenue source. On the other hand, if companies like Amazon and Overstock decide that the laws are too burdensome and just pull out of those states altogether, then nobody wins.

It's worth pointing out that you're really supposed to pay sales tax for most things purchased on the internet. But in most cases, the burden is on the shoppers, not the retailers. If enacted, these state laws would require the stores to collect the taxes which consumers pretty much never pay voluntarily.

[via The Business Insider]

Filed under: News

Amazon kills Rhode Island affiliate program

Amazon Associates
Last week Amazon shut down its affiliate program in North Carolina. This week it's Rhode Island's turn.

The Amazon Associates program allows web publishers to post links to Amazon products and earn a commission every time someone places an order after clicking those links. And a handful of states including North Carolina, Rhode Island, and New York have decided that this essentially means that if even a single person in any of those states has an Amazon Associates account, that's essentially means that Amazon has a physical presence in the state... and that means that the state can force Amazon to collect sales tax on sales to customers in those states.

Amazon sees things differently, and rather than being forced into collecting sales tax, the company has decided to simply terminate its affiliate programs in North Carolina and Rhode Island, two states that are on the verge of passing bills that would require Amazon to collect sales tax. New York already passed a similar law last year, but Amazon has been fighting it in the courts. In the meantime, Amazon still operates an Associate program in New York, presumably because the company stands to lose more money in sales by pulling out of New York than it will lose by shutting down its North Carolina and Rhode Island programs.

Update: It looks like we can add Hawaii to the list of states that Amazon used to offer its associates program in.

Filed under: Internet, News

Court: New York can tax Amazon, other online purchases

Amazon purchaseIt looks like the era of tax-free purchases from web based stores could be coming to an end. A while back, the state of New York decided it could raise a bit of much-needed revenue by collecting tax from online retailers. Generally states can only collect taxes if those retailers have a bricks and mortar presence in the region. But New York figured out an interesting way around that - it decided that advertising affiliates counted as a physical presence. In other words, as long as at least one New York State resident made money by placing Amazon ads on his or her web site or blog, New York could collect taxes.

And now it looks like the New York state Supreme Court agrees with that logic. Amazon and Overstock.com had sued the state over the law, and Newegg had decided just to stop collecting taxes. This week's ruling could change all of that.

This could be the beginning of the end for tax-free online purchases. Or it's possible that we could see Amazon, Newegg, Overstock.com, and similar web retailers kill their affiliate ad programs in order to stay competitive with companies that don't have to charge tax in states like New York.

It's worth noting that most states do actually require citizens to pay taxes on items purchased online. It's just that you're supposed to report those purchases voluntarily on your annual tax returns. And almost nobody does this. What's new about New York's law is that it requires the retailers to collect taxes.

[via Alley Insider]

Filed under: Business, Internet, News

New York to begin charging sales tax for online purchases

NYS taxYou know how if you live in most states in the US you don't have to pay sales tax on items purchased online? Yeah, that's about to change for about 19 million residents of New York State. Legislators have approved a bill that requires large online stores to collect sales tax for anything shipped to New York.

Technically, the tax isn't new. Consumers were supposed to be reporting these purchases on their tax returns all along, but nobody really does. The law just passes the burden from consumers to retailers.

While the bill doesn't become a law until Governor David Paterson signs it, he's expected to do so soon, as the measure is expected to raise $50 million and help balance the state budget.

Companies that collect less than $10,000 per year from sales to New Yorkers will be exempt. But something tells us that means you'll be paying taxes on purchase from large stores like Amazon.

Update: As we've reported in the past, this law wouldn't require all online stores to charge tax, but only online stores that do some form of business in New York State. And that business can include something as simple as operating an affiliate link program that lets New York residents make a few bucks by linking to Amazon products on their web pages. Former governor Eliot Spitzer had proposed the law late last year, but we had thought it was dead -- until yesterday. While it's possible that one outcome of this law could be businesses pulling out of New York altogether, a much more likely outcome would that Amazon and other companies with affiliate programs could refuse to let New York citizens sign up for affiliate accounts.

Filed under: Business, Internet, News

Tax-free online purchases could be a thing of the past

Amazon Affiliate linkSo you know how you don't have to pay sales tax on stuff you buy online unless you're buying it from a company that has a physical presence in your home state? Yeah, that could all be over soon.

New York Governor Elliot Spitzer has pledged not to raise taxes. But he's got a budget deficit to deal with, so he's trying to find new ways to collect taxes. And his administration believes they've found a loophole in that whole bricks and mortar thing.

Here's how it works. Sure, Amazon doesn't have a warehouse in New York. But lots of New York-based web sites have Amazon affiliate links. And Spitzer argues that effectively makes the New Yorkers who run those websites into Amazon salespeople, thus allowing the state to collect taxes from Amazon.

If Spitzer's plan holds up in court, it could open the floodgates and other states would likely be quick to follow. Either that or Amazon and other online retailers would stop offering affiliate programs. The plan is set to take effect in New York in December. So get your shopping done now.

Update: It looks like Spitzer has dropped this plan. For now.

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