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News & Press: Colorado Technology Industry

Amazon Suspends Affiliate Relationships - Less Than One Week from New Taxes/Regulations in Colorado

Monday, March 8, 2010   (0 Comments)
Posted by: Su Hawk
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(From The Northern Colorado Business Report March 8, 2010)
Amazon.com is cutting off its Colorado associates in response to recent legislation that asks online retailers to collect state sales tax.

Amazon sent a letter to its associates in Colorado informing them that due to the change in sales tax law implemented by House Bill 1193, it was closing their accounts effective March 8. Amazon's associate program allows websites to collect a referral fee of up to 15 percent for advertising Amazon products.

HB 1193, signed into law on Feb. 24, requests that online retailers collect sales taxes on any purchases made by Colorado residents. If they do not collect the taxes, they are required to inform the purchaser of his or her obligation to pay them. A retailer that does not collect the taxes must file an annual statement for each customer stating the amount of sales tax owed. The original bill would have placed the burden of collection on the affiliate or associate retailers, but several amendments shifted the focus to the retailer making the actual sale.

The Amazon letter, posted by Boulder blogger Dave Taylor said that it will continue to make sales to Colorado residents but will no longer advertise through associates based in the state.

"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," Amazon's letter read.

It goes on to suggest that associates contact local legislators and Gov. Bill Ritter to express their views. A media inquiry to Amazon was not returned in time for publication of this story.

HB 1193 was part of a tax package submitted to the Legislature by Ritter to help raise revenue to balance the state budget, which is facing a $2 billion shortfall.

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