Amazon Associates To Pull Out Of North Carolina Due To "Unconstitutional Tax Collection Scheme"

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picture-119We’ve received numerous reports of Amazon Associate members in North Carolina receiving emails stating that Amazon is going to have to discontinue the service there due to a pending change the in state’s tax structure. Sometime in the next two weeks, Amazon expects that it will be terminating the service for all North Carolina residents. That will be very bad news for a lot of people who rely on Amazon’s popular affiliate sales program as a source of income.

Here’s the full email:

We regret to inform you that the North Carolina state legislature (the General Assembly) appears ready to enact an unconstitutional tax collection scheme that would leave Amazon.com little choice but to end its relationships with North Carolina-based Associates. You are receiving this e-mail because our records indicate that you are an Amazon Associate and resident of North Carolina.

Please note that this is not an immediate termination notice and you are still a valued participant in the Associates Program. All referral fees earned on qualified traffic will continue to be paid as planned.

But because the new law is drafted to go into effect once enacted – which could happen in the next two weeks – we will have to terminate the participation of all North Carolina residents in the Amazon Associates program on or before that same day. After the termination day, we will no longer pay any referral fees for customers referred to Amazon.com or Endless.com nor will we accept new applications for the Associates program from North Carolina residents.

The unfortunate consequences of this legislation on North Carolina residents like you were explained in detail to key senators and representatives in Raleigh, including the leadership of the Senate, House, and both chambers’ finance committees. Other states, including Maryland, Minnesota, and Tennessee, considered nearly identical schemes, but rejected these proposals largely because of the adverse impact on their states’ residents.

The North Carolina General Assembly’s website is http://www.ncleg.net/, and additional information may be obtained from the Performance Marketing Alliance at http://www.performancemarketingalliance.com/.

We thank you for being part of the Amazon Associates program, and we will apprise you of the General Assembly’s action on this matter.

Sincerely,

Amazon.com

So what exactly is this “unconstiutional tax collection scheme”? Here’s what the site news-record has to say:

The tax change is part of a package passed by the House last week in its attempt to rewrite the budget. Lawmakers are struggling to fill what they say is a $4.5 billion gap between the money needed to keep government operating as it is and the revenue the state is due to take in next year.

As part of the effort to bridge that gap, House members broadened the number of items to which state sales tax would apply and have to be collected by retailers. The tax on the category “digital click-throughs” under which the Amazon agreements fall would raise $13.2 million next year, according to estimates by the General Assembly’s fiscal research arm.

With its “scheme” and “unconstitutional” wording, Amazon is clearly not happy about this. It also notes that other states have thought about similar measures but rejected them. But hey, that’s a pretty huge budget gap, makes me worried for what California might do. And what’s with the Carolinas and getting into dustups with web companies?

[thanks Mark]

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