Practical Technology

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Amazon pulls plug on NC Amazon Associates over taxes


I was bemused to find out this morning, June 26, that Amazon had put an end to my, and all North Carolina residents, Amazon Associates accounts. This program, for those who don’t know it, is simply a way you can use to sell Amazon products through your Web site.

The reason that Amazon did this is that NC has slipped a new tax in its state budget: a ‘click-through’ tax. This will apply NC sales tax to purchases of digital media and physical items that are bought after clicking through a Web site.

So, for example, you may never actually ever have a Michael Jackson Thriller CD in hand, but by providing an Amazon Associates’ sales link to the CD on your Web site to the Amazon Web page where it can actually be bought, NC intends on levying a sales tax on your ‘sale.’

In NC sales tax can range from 6.75% to 7.5% depending on your county and city residence. Associates already pay income tax on their Amazon earnings, This is an additional tax based on the questionable logic that Associates are de facto Amazon employees.

Amazon, wanting nothing to do with either the sales tax and the accounting nightmare that goes with over a hundred different sales tax brackets for tens of thousands of Amazon ’employees,’ elected to get out of the Associates business in NC. Amazon’s notification read: “Your Associates account has been closed as of June 26, 2009. This is a direct result of the unconstitutional tax collection scheme expected to be passed any day now by the North Carolina state legislature (the General Assembly) and signed by the governor. As a result, we will no longer pay any referral fees for customers referred to or after June 26. We were forced to take this unfortunate action in anticipation of actual enactment because of uncertainties surrounding the legislation’s effective date.”

This isn’t just a paper declaration. I discovered this morning that my Amazon Associates account had been closed. People who live in NC who sell used items through Amazon do not appear to be impacted by this change.

The note continued, “In the event that North Carolina repeals this tax collection scheme, we would certainly be happy to re-open our Associates program to North Carolina residents.” I found it noteworthy that this message did not include such standard boilerplate as a description of how to protest this new tax to the government. This seems not to be an attempt to get Amazon Associates to rise up in protest, but a simple announcement that Amazon has simply given up on the NC government and, as a result, its NC-based Associates.

I’m soooo pleased. I make a tiny (<$500) a year from Amazon Associates links in my Practical Technology stories, but I know some people in NC who actually make.. ah make that 'made' a living from being an Amazon Associate such as GPS Deals and Go Ask Mom. For these small businesses, this is a death blow.

While NC is more than willing to give tax breaks to major companies like Apple and Google, it seems perfectly happy to kill off the small and micro-businesses that rely on Amazon Associates. Nothing like killing small businesses to increase your corporate tax base NC. Good job. Well done.