Amazon Dropping Affiliates Over Taxes

Amazon has severed ties with affiliates in Hawaii, Rhode Island, and North Carolina over the thorny issue of collecting sales tax from online sales.

Internet sales giant Amazon has long made use of affiliates round the country, who make money whenever someone clicks on a link from their site to make a purchase at Amazon. 

However, that’s changing in several areas, and in the last week Amazon has severed links with affiliates in North Carolina, Rhode Island, and Hawaii after those states passed legislation that approves collecting sales tax on online transactions. 

But the story really began in New York, when a judge ruled that affiliates were essentially the same as having a physical presence in the state, and that the state could collect taxes. Amazon is fighting that ruling in court, although it is collecting the tax. 

For the other states, though, Amazon has decided that discretion is the better part of valor and has dropped out of the affiliate game, although it says it will return of the law changes. 

On the North Carolina decision, Amazon spokesperson Patty Smith said: 

"It’s not a decision we take lightly. It’s unfortunate that given the way the legislation is drafted, we have no choice." 

There’s some serious money involved in the issue. The tax figures involved in North Carolina are around $6 million, with $3 million in Rhode Island sales taxes.