Moe Lane

Came across this article via Hot Air on Indiana and Amazon.com coming to an agreement on collecting sales tax – short version; Amazon.com will start being liable for collecting sales tax in Indiana in 2014, or when federal legislation is passed, and not a moment before – and I was struck by the lack of information in it.  Specifically, on why Amazon.com was going along with this in the first place.  Generally speaking, Amazon.com‘s response to having individual states (they’re actually supportive of a federal program to straighten out state sales tax schemes) try to force it to collect sales tax is to refuse: it has a Supreme Court decision (Quill Corp v. North Dakota) that has established that companies do not need to collect states sales tax in states where they do not have a physical presence, and recent state legislative attempts to define ‘local online affiliates’ as ‘physical presence’ simply results in Amazon.com ending its affiliate programs in those states*.

So I looked it up… and it turns out that Amazon.com has a legitimate physical presence in Indiana (distribution centers); it had negotiated an agreement in 2007 with the state government to not be liable for collecting sales tax anyway.  Somebody sued over that, and Amazon.com has apparently decided that it might not win that particular lawsuit… so it made a deal where it will start being liable for sales tax collection a couple of years down the road.  All of which probably should have been in the story from the beginning, huh?

I shouldn’t complain: the inability of supposedly trained professionals to actually report the news has been a great personal boon to me and mine.  But it still bemuses, sometimes.

Moe Lane

Full disclosure: I am an Amazon.com Affiliate for Maryland.

*Except in New York, where they’re still fighting it in the courts.

The can has been kicked for another year.

Lawmakers on Friday sent Gov. Jerry Brown a compromise bill that delays California’s effort to force online retailers such as Amazon.com to collect the state’s sales taxes while retailers lobby Congress for national rules governing online sales taxes.

Essentially, California legislators passed a bill earlier this year that ‘exploited’ a loophole in federal case law that would have required Amazon.com (and others) to collect sales tax on purchases made by California residents.  Amazon.com (and others) promptly ended the affiliate program that provided the loophole.  California legislators blinked with surprise, because apparently they completely missed noticing that Amazon.com always does this (except in New York, where they’re fighting the law in court).  Shockingly, California legislators have now apparently gotten a rush of oxygen to the brain and delayed ‘implementation’ of the tax until September of 2012; this time is supposedly to allow Amazon.com and other online retailers to petition Congress to straighten out national sales tax guidelines (something that Amazon.com has been pushing for, actually). Assuming that Governor Brown signs off on this – and, given that the original bill has pretty conclusively been already shown to be wildly if not insanely optimistic in its estimated revenue*, he’d have to be extremely dumb not to** – Amazon.com will turn its affiliate program back on. (more…)

…Wait.  What?

A coalition of groups that advocate for the elderly and poor are urging California online shoppers to boycott Amazon.com because of its refusal to collect state sales tax on purchases made through the website.

…Entertaining, isn’t it?  After all, actual elderly and poor people (as opposed to the parasitical organizations that ‘organize’ on their behalf)  will continue buy stuff on Amazon.com largely for the deals… and to effectively avoid paying sales tax.  Sure, you still have to, anyway – technically.  But no politician with a measurable IQ wants to start arresting people for evading sales tax on online purchases, because that’s a quick way to become a former politician.  And if the Democrats – it’s typically the Democrats who can’t seem to instinctively understand the cold logic involved here – could convince a sufficient number of people that they want to voluntarily pay their sales tax then they wouldn’t be trying to get Amazon.com to do it for them.

So I guess that the boycotters are kind of, well, stuck there.

Via Instapundit, who has… suspicions 0n who’s paying for all of this.

Moe Lane

Full disclosure: I am an Amazon.com Affiliate in Maryland.

(Full disclosure: I am an Amazon.com Affiliate for Maryland.)

Glenn Reynolds noted this apparent contradiction in what Tennessee Governor Bill Haslam’s position actually is with regard to having Amazon.com collect sales tax: is the Republican Governor for it, or against it?  I say ‘apparent’ because there isn’t one, really; there’s just not enough context.

Basically, the position that Haslam is taking is that the state of Tennessee trying to impose an Amazon tax would probably wreck ongoing negotiations between the state and Amazon.com when it comes to getting a couple more job-creating distribution centers built in-state (which it probably will).  Haslam also thinks that a national, standardized system for sales tax is both necessary and proper:

[Haslam] said Tennessee is already losing between $300 million and $500 million a year on untaxed Internet sales — a growing number since the states and Congress have been unable for more than a decade to agree on a “streamlined sales tax” process enabling online retailers to collect taxes easily for the nation’s thousands of state and local taxing jurisdictions.

“It’s not going to begin eroding the state’s tax base; it already is. Something has to happen nationally. The whole streamlined sales tax is a big deal, and I’m more than willing to play a leadership role,” Haslam said. “It has to be addressed on a national level or we’re going to keep playing these kinds of move-around games.”

(more…)

(Full disclosure: I am an Amazon.com Affiliate for Maryland.)

It’s still in the early stages – the Governor has started the paperwork process and Comptroller for Maryland Peter Franchot supports the idea – but the definition of insanity is doing the same thing over and over again and expecting a different result, and goodness knows that the Democrats keep doing precisely that when it comes to Internet taxes.  Franchot (who, as the Red Maryland podcast above notes, is likely running for Governor in 2014) is claiming that the revenue that Maryland would glean would be roughly $160 million; given the way that Maryland’s Democratic-controlled government has wrecked the state’s economy recently, that number is a glittering prize.

A real pity that it’s a mirage.  (more…)

A friend and colleague of mine just got this email:

Subject: Notice of Contract Termination Due to Potential New California Law

Hello,

For well over a decade, the Amazon Associates Program has worked with thousands of California residents. Unfortunately, a potential new law that may be signed by Governor Brown compels us to terminate this program for California-based participants. It specifically imposes the collection of taxes from consumers on sales by online retailers – including but not limited to those referred by California-based marketing affiliates like you – even if those retailers have no physical presence in the state.

We oppose this bill because it is unconstitutional and counterproductive. It is supported by big-box retailers, most of which are based outside California, that seek to harm the affiliate advertising programs of their competitors. Similar legislation in other states has led to job and income losses, and little, if any, new tax revenue. We deeply regret that we must take this action.

As a result, we will terminate contracts with all California residents that are participants in the Amazon Associates Program as of the date (if any) that the California law becomes effective. We will send a follow-up notice to you confirming the termination date if the California law is enacted. In the event that the California law does not become effective before September 30, 2011, we withdraw this notice. As of the termination date, California residents will no longer receive advertising fees for sales referred to Amazon.com [ http://www.amazon.com/ ], Endless.com [ http://www.endless.com/ ], MYHABIT.COM [ http://www.myhabit.com/ ] or SmallParts.com [ http://www.smallparts.com/ ]. Please be assured that all qualifying advertising fees earned on or before the termination date will be processed and paid in full in accordance with the regular payment schedule.

You are receiving this email because our records indicate that you are a resident of California. If you are not currently a resident of California, or if you are relocating to another state in the near future, you can manage the details of your Associates account here [ https://affiliate-program.amazon.com/gp/associates/network/your-account/payee-info.html ]. And if you relocate to another state in the near future please contact us [ https://affiliate-program.amazon.com/gp/associates/contact?subject=&ie=UTF8 ] for reinstatement into the Amazon Associates Program.

To avoid confusion, we would like to clarify that this development will only impact our ability to offer the Associates Program to California residents and will not affect their ability to purchase from Amazon.com [ http://www.amazon.com/ ], Endless.com [ http://www.endless.com/ ], MYHABIT.COM [ http://www.myhabit.com/ ] or SmallParts.com [ http://www.smallparts.com/ ].

We have enjoyed working with you and other California-based participants in the Amazon Associates Program and, if this situation is rectified, would very much welcome the opportunity to re-open our Associates Program to California residents. We are also working on alternative ways to help California residents monetize their websites and we will be sure to contact you when these become available.

Regards,

The Amazon Associates Team

(more…)

Amazon.com canceled its affiliate program in Illinois.  Overstock.com will be doing so on May 1st.  Zappos and Shoes.com are in the process of doing the same.  Companies that rely on this affiliate program are planning to relocate out of Illinois and somewhere (Wisconsin says hi!) that doesn’t have an Amazon tax.  All of this is hardly news: Illinois legislators had this explained to them from the start.  They just ignored it, not least because they’re actively courting some of the big-box brick-and-mortar retailers (who are currently having their milkshakes drunk by online retailers).

And note well: none of this will affect the average consumer’s ability to buy stuff from Amazon.com, or any of the other large Internet-based retailers.  It merely shuts off state revenue in the form of income tax that Illinois was earlier and effortlessly gathering from in-state retailers.  Revenue that will not be made up for by taxing any mild sales increases for, say, Wal-Mart.

Moe Lane (more…)

Right on schedule.

It got overshadowed by recent events both foreign and domestic, but last week Governor Pat Quinn (D, IL) signed legislation declaring that in-state affiliates for online sellers count as ‘a physical presence’ in Illinois, thus theoretically allowing the state to require those online sellers to collect sales tax information.  This is usually called the ‘Amazon tax*,’ as it is largely aimed at Amazon.com**. This is a long-standing dispute (H/T: Instapundit), and usually ends with the companies in question ending their affiliate programs: Illinois businesses and individuals were however assured (by groups like the Illinois Retail Merchants Association) that there was no chance that Amazon.com would dare end its affiliate program for Illinois***.

Turns out that this was incorrect: as usual in these cases, Amazon.com (and Overstock.com) immediately closed down its affiliate program for Illinois (beginning April 15), thus making the issue moot.  This means that no Illinois resident or company will receive a commission for sales – which means lost revenue, which means less taxable revenue for the state of Illinois (Amazon.com requires its affiliates to fill out 1099 forms, and the money that affiliates generate is subject to income tax).  It does not mean that Amazon.com itself is forbidden to Illinois: Illinois residents may continue to purchase products from the company – and given its current market share, the lack of affiliate linkage will probably not have any effect on the company’s sales at all.  In other words, the state of Illinois has just reduced its annual tax revenue and absolved Amazon.com of the necessity of paying out 4% to 15% commissions on any product indirectly sold on its behalf by a citizen of Illinois.

Brilliant move there, Governor Quinn.

Moe Lane (crosspost)

(more…)

[UPDATE: 'Amazon tax laws,' for those who are wondering, represent attempts to get around a Supreme Court ruling regarding out-of-state transactions.  Residents of states who have a sales tax are theoretically expected to pay sales tax on all transactions, not just ones that take place in-state: however, vendors with out-of-state customers have long taken the position that trying to keep track of every jurisdiction's sales tax rules is an undue burden upon them.  The Supreme Court agreed, ruling that vendors are only required to track and collect sales tax on transactions for states where they had a physical presence.  This effectively means that online retailers such as Amazon.com are effectively released from the burden of collecting sales tax information.  Various Democratic state legislators - blanching at the very idea of trying to enforce individual residents from reporting their online transactions for taxation purposes - have attempted to make an end run around this ruling by writing legislation declaring in-state affiliates of online retailers as counting in terms of 'physical location:' Amazon's typical response is to immediately cancel all affiliate programs in the targeted state, thus eliminating any need for them to collect sales tax information.]

That’s the preliminary ruling by a US District Court judge, at least: he’s ruled that the law is unconstitutional on Commerce Clause grounds, and has issued a preliminary injunction to prevent the state of Colorado to enforce the disclosure rules on out-of-state vendors before the deadline.  I am not a lawyer, but the short version is that the judge ruled that the Amazon tax law violated the Commerce Clause by putting regulatory and disclosure burdens on out-of-state vendors that were not present on in-state ones; that the plaintiffs (including the Direct Marketing Association) had a valid chance to prevail in the broader case; and that until the issue was involved it would be inappropriate for the State of Colorado to collect information as per the Amazon tax law.

This is only a preliminary injunction, obviously: if this court or a higher one decides that the law is Constitutional after all it’ll be reversed.  That’s why Colorado House Majority Leader Amy Stephens (Republican, of course) is introducing legislation repealing the original law.  Colorado Senate Majority Leader John Morse (Democrat) is reflexively opposing the repeal, even though he’s sufficiently ignorant of the ruling as to apparently think that either the DMA or its members have revenue caps of $600/year.  New Governor Hickenlooper is thus in a bit of a jam; he’s facing a House that decidedly flipped last election cycle and a looming court controversy, and a remarkably uneducated set of Senate allies on the other.  That this can be fairly categorized as a ‘bit of a jam’ tells you a lot about the current ideological condition of the various state Democratic parties. (more…)

Yes.  Of course.  Because Amazon won’t pull their affiliate program out of Maryland – thus making the entire exercise moot – the moment that it passes.  Just like they didn’t do it in North Carolina or Rhode Island, and just like they aren’t still thinking about doing it in New York, depending on how the court cases go.

And before I hear about how this won’t have any effect on individual affiliates, so Amazon.com is being absurd:

The bill would require a Web retailer like Amazon.com to charge sales tax on orders to Maryland customers if the retailer gets more than $10,000 in sales a year from affiliate marketers — sites run by businesses or individuals in the state that have contracts to send sales traffic to large retailers.

Ten grand in sales, not profit.  That’s small.  How small? Let me put it this way:  MoeLane.com’s referrals last year would have required Amazon to collect sales tax.  Not that I saw ten grand in revenue, or even a tenth of that (and the amount that I did see was duly taxed by the State of Maryland, even though as far as I can tell the State of Maryland didn’t do anything specific to earn its cut).  And if these Senatorial idiots Richard S. Madaleno and Ulysses Currie (both Democrats, of course) have their way, I – and the State of Maryland – won’t see a tenth of that tenth, because my Amazon Associates account will be terminated before the ink’s dry on the signature of their shiny new law. 

And then nobody gets any money.

My only comfort is that I didn’t actually vote for any of these people.  Being a Republican, and everything.

Moe Lane

PS: Full disclosure, in case it isn’t obvious: I am an affiliate of Amazon.com (ahem). At least, for right now.

(Via Instapundit) Not that I wanted them to, but if they’re going to insist on shutting down Colorado’s Amazon Affiliates program* I can at least look on the bright side.  Fortunately, there are enough Marylander legislators with working brain cells to continue to make it possible for me to put up this link:

Amazon.com

…and still hope to generate revenue from it.  I’m truly sorry that people from North Carolina, Rhode Island, and now Colorado can’t, but it’s not my fault that all three states have Democratic-controlled legislatures.

Oh, yeah, full disclosure: I generate revenue from Amazon Associate links.  As if you hadn’t guessed already.

Moe Lane

*More details here, including some pushback on the standard Lefty objections to Amazon.com ending its CO affiliates program.  See also here for a site dedicated to reversing this.