An article in the Stamford Advocate (CT) reveals that Amazon has joined Overstock in ending its affiliate relationships in Connecticut in response to a Connecticut law requiring online retailers with affiliates in the state to collect sales tax.
The move wasn’t unexpected—Amazon has ended its affiliate program in nearly every state with an affiliate nexus law, and Overstock did the same over two weeks ago. But we are sad to see it happen. Many small businesses rely on income from affiliate programs:
A [Stamford Advocate] reader, Jim Cameron, sells books through his website “CT Yankee Books”, forwarded the email [from Amazon terminating his affiliate contract] to Hearst Connecticut Newspapers.
Cameron said in his email, “For a few years now I’ve had a hobby of collecting and re-selling old books online. Today, I was put out of business.”
It’s particularly unfortunate because there is a much better solution for states, affiliates, and retailers: federal legislation in the form of the Main Street Fairness Act.
The Main Street Fairness Act would let states require online retailers to collect sales tax, as long as the state has adopted sales tax simplification measures that make it easy for retailers to collect sales tax in multiple states. It would solve the problem of uncollected sales tax for states without targeting retailers that use affiliate programs—so those affiliate programs would remain in place.
Only federal legislation will give states another solution and put an end to affiliate nexus legislation. We hope Congress is listening.