As an online marketer based in Colorado (now terminated by Amazon as of this morning, see email below) I am compelled to question the sanity of the state in which I was born and raised. Lesson: Beware of what your state is up to in their efforts to increase revenue.
Colorado has enacted law (HB 10-1193) to impose sales tax regulations on online retailers. This includes online marketers that make money by referring buyers as in the case of Amazon. Amazon’s reaction? “You’re Fired!. What’s next? Rumors have it that Overstock is not far behind with a similar reaction. And, we also hear rumors this could impact network marketing associates.
I can honestly say this is the first time I’ve been fired. Via email. By people I don’t even know.
Here is the full text of Amazon’s letter:
From: associates-autoresponse@amazon.com
Subject: Important Notice from the Amazon Associates Program
Date: March 8, 2010 1:10:18 AM MST
“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”
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{ 8 comments… read them below or add one }
Here’s the letter I sent to the email of every rep. I could. let me know if you want the list of email addresses.
To Whom It May Concern,
I’m not a big business… I’m a former teacher (Greeley), turned massage therapist (Aurora), turned business owner (Denver and Parker).
I’m a regular 30 year old married guy with a small online presence.
Since my voice hasn’t been heard in the past, I’m emailing everyone who’s email address I can find.
The passage of HB 10-1193, and the Governor’s signing of the bill, has resulted in my termination from the Amazon Associates program.
Other affiliate programs and businesses are sure to follow suit with their contractors in Colorado.
In case you’re not aware, Amazon’s Associate program is a program in which people can get paid referral fees for selling products on Amazon.com.
I WAS earning referral fees from marketing those products to people all over the world.
Those referral fees were then taken and spent in Colorado, at COLORADO businesses, hiring contractors (writers, email support, bookkeeping services, etc.) IN COLORADO, and helping to build the economy of our state.
I have SEVERAL friends who have also found their accounts terminated today, everyone I know (myself included) paid taxes on this income last year, and everyone I know who is part of this program in Colorado spends this money in Colorado.
I won’t be able to earn income anymore through Amazon.com, at least not in Colorado, thanks to the passage of this poorly enacted piece of legislation.
Why is it a poor piece of legislation?
It was created to influence retailers into paying Colorado sales tax.
Amazon.com has no business presence in Colorado.
But they have me as an affiliate, a contractor, a person who has no say or control over what direction Amazon will take their business
Neither do 99.999% of all affiliates through Amazon.
However, because you designated, through this law, that affiliates constitute a business presence for Amazon.com in our state, Amazon terminated ALL affiliates in Colorado, even those earning less than $10,000 annually (which is most of us).
Again, affiliates are not employees. Affiliates have no real say in the direction of Amazon’s business.
Just so you’re aware, here’s what will happen with the passage of this law.
The big players who can afford to will simply move their businesses out of Colorado, so you will no longer benefit from their spending or through being able to tax their businesses.
You will not be able to collect taxes from Amazon.com, and other companies will simply choose not to associate themselves with affiliate marketers based out of Colorado.
Current companies with larger operations in Colorado as contractors will either relocate their contractors or simply terminate their relationship.
In the online world, all this law has done is penalize smaller affiliates. In the “real” world, what taxes are you going to be able to collect? And how will this law be enforced?
HB 10-1193 is quite possibly the worst way to deal with legislation surrounding collecting Colorado sales tax.
I agree that sales tax in our state is a good thing.
- But what about the income collected in the form of income tax from 1099 contractors?
- What about those who choose Colorado as a place to operate their businesses and spend money hiring employees, (people who buy groceries and gas at local stores), buying foreclosed property and fixing it up, in our state?
I’m pretty sure this bill was passed with good intentions, but I’m completely lost as to the thinking behind how passage of this law would increase revenues or spending or the overall wellbeing in our state. This law has been passed with no positive result I can see now, or in the future.
You were hoping this law would help to alleviate the state’s budget deficit. Instead, it takes money, employment, and investment opportunities out of Colorado.
Since Amazon has terminated it’s affiliates, other online retailers will follow suit.
As for me, I don’t know what I will be doing, but will be figuring it out this afternoon.
I don’t know if my small voice really makes any real difference, especially since this legislation was passed anyway.
However, I thought it important for you to know how this legislation has affected my ability to spend money in our state, and the state’s ability to collect taxes on my income.
In case it’s not clear from this email, a vote in favor of this bill has affected my life and my ability to help our state in a very negative way, and in my perspective has decreased the tax revenues for the state.
Regrettably,
Jonathan Kraft
Jonathan,
Thank you for sharing your letter! I think your voice can make a difference. We appreciate that you shared this letter with us, and others… it is very compelling and well stated.
Thank you for your efforts in this cause. We need more people like you!
I live in Colorado and don’t make a ton of money from my affiliate accounts, but I make a few dollars and do put the money back into Colorado and pay my taxes. A lot of my affiliate accounts and income come from online poker sites are they going to be shut down next. Well then that would be more money not going into Colorado. I run an online radio Business and do a lot of online advertising, does that mean I can’t do that any more also. “What’s Next”
I didn’t see this coming. I’ve detached myself from most politics. I too live in Colorado and have made a little money over the years.
What has Colorado Politicians said by enacting this bill? Take your business elsewhere. Both to the Amazons of the world and to the residents of Colorado. Even the Federal Government with all their failing realize unless they can devise a cohesive, comprehensive across the board fairness tax for Internet commerce, the only ones that will get screwed are the small time people trying to earn a few extra dollars so our kids can enjoy things.
Excellent! If I could write like this I would be well pleased. The more I see articles of such quality as this (which is rare), the more I think there might be a future for the Web. Keep it up, as it were.
Hey Jonathan, I was going to comment on your blog, but I might as well do it here…
What you guys need to do is incorporate in another state. I incorporated in Nevada for a couple of hundred dollars, and you guys can too. Then all you have to do is go back to your Amazon account and change your business name and enter the address for your agent in Nevada. Presto, you aren’t a Colorado business anymore, you just own a Nevada corporation that has Colorado employees…
Dang getting around the “MAN” is easy if you just think about it. Good luck guys.
Greg Anliker
Hi there – any updates on this? I thought I heard a few months ago that Colorado repealed the law, or the DMA won a lawsuit against the state of CO regarding this law. But Amazon still won’t let me in. Would love to know the latest. Thanks!
Thanks for your comment Merri. Gave me a little nudge to poke around online to see what I could find:) There’s some good articles over at the Colorado Statesman (http://coloradostatesman.com). Just do a site search for “Amazon”. It would appear the bill repealing the “Amazon tax” (HB 11-1318) was killed at the State Senate. Couldn’t find anything very current on the DMA lawsuit.