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Author Topic: Amazon nukes Illinois affs  (Read 7314 times)

rcjordan

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Amazon nukes Illinois affs
« on: March 11, 2011, 08:38:39 PM »
Amazon Takes Action in Illinois as War on Sales Taxes Continues

http://online.wsj.com/article/SB10001424052748704399804576193212782052704.html
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DrCool

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Re: Amazon nukes Illinois affs
« Reply #1 on: March 11, 2011, 10:53:57 PM »
I know there were some big affiliates and a network who were really fighting this deal.

What sucks is the bill got pushed through on the platform of "fairness", primarily for small, local merchants. But who were some of the companies fighting to get this bill passed? Walmart, Sears, JC Penny, and other big box stores. I am sure they have put more small merchants out of business than Amazon and other online merchants.
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ergophobe

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Re: Amazon nukes Illinois affs
« Reply #2 on: March 12, 2011, 12:57:39 AM »
One can hope that someday there will be a sensible national policy but between legitimate constitutional issues, the pigheadedness of state legislatures and the dire fiscal straits of most state governments, I'm not holding my breath.  It's probably about as likely and as imminent as rational tax reform at any level in the US.

[and by the way, I don't know what a rational tax system would look like, but presumably at least one economist would look at it and say "this is a pretty good system"]
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werty

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Re: Amazon nukes Illinois affs
« Reply #3 on: March 29, 2011, 06:44:59 AM »
This will effect us. It is not a huge impact since we do not do much on Amazon, but a few other companies have already followed. Musicians friend for example.

I wonder how far they will try and stretch things out... affiliates > affiliate companies > advertising > etc. Not sure exactly how it ties to just affiliates.

Google has an office in Chicago and I think performics used to be here, so I wonder if they will eventually come after that connection, and try to tie merchants into the state like that.

Series of tubes!

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DrCool

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Re: Amazon nukes Illinois affs
« Reply #4 on: March 29, 2011, 05:45:37 PM »
Shareasale is also based in Chicago.

Other merchants I know that have or will be terminating their affiliate agreements with Illinois affiliates include Zappos, Overstock, and Hayneedle and there are many smaller ones as well.
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littleman

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Re: Amazon nukes Illinois affs
« Reply #5 on: March 29, 2011, 06:54:24 PM »
What a mess.  I'm quite worried about California with this now that Arnold is out.
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Rumbas

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Re: Amazon nukes Illinois affs
« Reply #6 on: March 30, 2011, 12:33:46 PM »
I've seen so much talk about this recently, but haven't really paid attention.

So what's the fuzz? You US guys going to start paying tax on your aff earnings?
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Drastic

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Re: Amazon nukes Illinois affs
« Reply #7 on: March 30, 2011, 01:11:00 PM »
What happens is a state decides they want to start taxing purchases made through affiliates who reside in the state. Rather than set up the tracking, and the major headache of taxing properly per state, county and city, aff programs terminate those affiliates.

What needs to happen is an Internet tax mandated at the federal level and paid to states, which won't happen in any reasonable way.
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DrCool

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Re: Amazon nukes Illinois affs
« Reply #8 on: March 30, 2011, 05:16:54 PM »
Quote from: Drastic on March 30, 2011, 01:11:00 PM
What happens is a state decides they want to start taxing purchases made through affiliates who reside in the state. Rather than set up the tracking, and the major headache of taxing properly per state, county and city, aff programs terminate those affiliates.

What needs to happen is an Internet tax mandated at the federal level and paid to states, which won't happen in any reasonable way.

I think it is more than the tracking issue. That wouldn't be kind of a pain for merchants but not too hard to implement. I think the problem comes in when as a consumer I go to Amazon through an affiliate link from someone in Illinois and see sales tax on my order total. I think "Why am I paying sales tax? I will just run down to Walmart and get it and not have to pay shipping". So having to pay the tax takes away some of Amazon's competitive advantage. So it is a bit more complex of an issue than just tracking.

Also for an affiliate based in Illinois they lose out as well because if, for example, an affiliate like FatWallet who is based in Illinois has a link to a product and the customer sees the tax they will not buy as readily. So that is a commission they lose out on.


All in all it really sucks.
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Drastic

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Re: Amazon nukes Illinois affs
« Reply #9 on: March 30, 2011, 05:27:10 PM »
Quote from: drcool on March 30, 2011, 05:16:54 PM
I think it is more than the tracking issue. That wouldn't be kind of a pain for merchants but not too hard to implement. I think the problem comes in when as a consumer I go to Amazon through an affiliate link from someone in Illinois and see sales tax on my order total. I think "Why am I paying sales tax? I will just run down to Walmart and get it and not have to pay shipping". So having to pay the tax takes away some of Amazon's competitive advantage. So it is a bit more complex of an issue than just tracking.

Yep, there's that issue too. PMA made an excellent point about the tracking though, as many little towns have their own tax codes, and it's not as simple as one might think. It would possibly depend on the actual nexus location (affiliate address) as well as the purchase/delivery address, possibly taxing either or both, and varying rates according to location of each and according to each states quirky setup. It's a pretty muddy situation.

It was interesting going to battle with a state legislature appointed committee about this. Unfortunately, last I heard was they were going to recommend it anyway, though it seemed during the hearing we had them convinced.
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werty

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Re: Amazon nukes Illinois affs
« Reply #10 on: March 31, 2011, 08:51:14 PM »
My take on it is that illinois would want amazon to collect tax on all purchases in illinois. Then it would be on amazon to send the monthly payments to the state. BUT things get weird when different counties and all of that get involved with all of their different rates. So amazon just said FO and got rid of affiliates which are the only thing to tie them to the state.

I guess in illinois this year, we are supposed to pay taxes on anything we buy out of state and use in state. I think at this point our bankrupt state is just trying to get any money they can. They doubled our income tax this year and pretty much said they have no intentions of spending cuts. Awesome.

I think a federal online tax is really the only solution but that will be a giant mess if they ever try and do that.

Does anyone know if IL is doing the same thing that NY tried or is it slightly different. Either way it sucks and it cost me my amazon aff money. I guess my solution is to move my biz out of state.

I make most of my money from pr0n still so as long as there is not a jerkers tax I should be fine.... but it is probably just a matter of time until they try to collect on that.
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rcjordan

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Re: Amazon nukes Illinois affs
« Reply #11 on: April 01, 2011, 02:17:50 AM »
>So amazon just said FO and got rid of affiliates which are the only thing to tie them to the state.

Well, not the only thing. Somes states have Amazon distribution centers but amz negotiates a "this-does-not-create-nexus" agreement with the state's economic development department before they move in.

>move

Pick a state that doesn't have sales tax 'cause this is going to happen everywhere.
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rcjordan

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Re: Amazon nukes Illinois affs
« Reply #12 on: April 12, 2011, 11:01:32 PM »
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grnidone

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Re: Amazon nukes Illinois affs
« Reply #13 on: April 13, 2011, 12:23:24 AM »
Why do they go after the affiliate in the state?  Shouldn't the tax be based upon where the customer lives no matter how they got to the site?
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rcjordan

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Re: Amazon nukes Illinois affs
« Reply #14 on: April 13, 2011, 01:11:43 AM »
The states use the affiliates living in the state to show that the merchant has 'nexus' (loosely defined as a tangible presence doing business) within the states. Merchants who have nexus have to collect and remit on taxable goods.   It doesn't have to be affiliates that establish nexus. If a company sends a road salesman on routine calls to another state then that can create nexus.  Or establishing a shipping center.

Caution time warp!

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