Just received that very e-mail notifying me that my Amazon associate account is now closed. You're right they will get nothing, now how stupid is that.

>>You're right they will get nothing, now how stupid is that.

But it is "fair" which is all that matters to some.

Why is this so hard to learn?

Tax something and you get less of it.

Old Soviet joke:

Soviet dissident: "Under socialism, we have nothing!"

Communist Party member: "True enough. However, at least it's equally shared."

I'm just wondering - what did North Carolina try to tax and why did Amazon have to close the Associates program to get rid of it?

The email has precious little background information and I'm wondering why.

D

Famed blogger and teacher Betsy Newmark, of Betsy's Page, used her Amazon referral income to buy extra books for her history students and school library. The damage is far deeper than mere taxes.

It is less than nothing because now they don't get the income tax either. And yes there are a number of schools that use referral programs as part of their fund raising so now that is gone. When are the governments going to get the fact that the real economy is around 8.6 trillion and dropping? Government is going to have to contract and if you are a local government you had better look at how you are going to keep control of your budget and not depend on state and federal money because there is going to be nothing shortly.

Yes, please add a link to any previous blog posts, or to a news story or other blogger who covers this situation. What tax is NC planning against Amazon that canceling the program will prevent?

Hm. See this story.
http://www.news-record.com/content/2009/06/26/article/amazon_cuts_relationships_with_affiliates

It appears that NC is trying to impose a sales tax on purchases made through affiliate click-through links, even if the purchases does not live in NC.

I live in New York, and Amazon already collects NYS sales tax on my purchases. It seems that this new law would have required Amazon to also collect NC sales tax, if I followed a click-through link from an NC resident.

David,

I don't know for sure, but I would guess that the legislation would make Associates an official business address in NC (which is just nonsense), making all sales in NC taxable (not just those with an Associate in NC).

If a business has an office in your state (even if the HQ is somewhere else), mail order or not, you have to pay sales tax. By closing the program in NC, Amazon is sending the signal that they won't be bullied, and this will discourage other states from passing similar legislation, to make the address of royalty or commission recipients an address of the company.

States have been salivating over ways to apply sales tax to out of state purchases.

It is, as Amazon has stated, an unconstitutional measure. The Founders wrapped it up entirely. Congress cannot tax goods in a state and states can't tax each other's goods.

Article I: Section 9: No Tax or Duty shall be laid on Articles exported from any State.

Article I: Section 10: No State shall, without the Consent of the Congress, lay any Imposts or Duties on Imports or Exports, except what may be absolutely necessary for executing it's inspection Laws: and the net Produce of all Duties and Imposts, laid by any State on Imports or Exports, shall be for the Use of the Treasury of the United States; and all such Laws shall be subject to the Revision and Control of the Congress.

This is not a democrat / republican thing. This is that the state governments are broke because greedy wall street stole our confidence in American commerce. The states are grasping at straws to get enough money to keep police on the streets.
Internet merchants have escaped state sales taxes. North Carolina tried to grab some revenue from in-state internet merchants, so their local Walmarts would not be at so much of a disadvantage. It does not appear to be working.

A quick and dirty explanation for those who don't understand what it's all about.

Amazon associates are bloggers that have cut a deal with Amazon to get a percentage of the purchase price of items they recommend if their readers who purchase those items do so through a direct link to Amazon from their blog.

Usually a state doesn't charge sales tax on internet sales items because States can collect taxes on goods that people buy off the internet only if the company they bought the stuff from maintains an 'economic presence' in that state. Traditionally this means a brick and mortar store that handles distribution of goods ordered on line.

Because Amazon has no retail outlets in any state the only revenue that the state can legally collect on Amazon's total sales to residents of the state is the income taxes on the payment by Amazon to their associates and sales through these associates is a very small fraction of Amazon's total sales in any state

North Carolina has decided to expand the definition of an 'economic presence' for Amazon in their state to include bloggers who are Amazon associates that reside in North Carolina.

This would allow the State of North Carolina to charge sales tax on ALL sales by Amazon to anyone residing in North Carolina, not just on sales by Amazon Associates.

By trying to gain a sales tax windfall on all of Amazon's sales in NC the NC legislature has effectively destroyed a small but healthy revenue stream available to the citizens of North Carolina.

otpu

This is not a democrat / republican thing. This is that the state governments are broke because greedy wall street stole our confidence in American commerce.

Sorry, Ted, I call bullshit.

The states have not been living within their means. They've been providing welfare benefits to anyone who passes through. They've discouraged business development (where they can get additional tax revenue) and put onerous regulations on new business startups and home-based businesses.

And it is a republican/democrat thing, because the states in the most trouble are the ones who have been ruled by democrats.

The government is supposed to be the ally of business, but they've become its enemy, deciding instead to throw entitlement coins at citizens to get elected, and tax businesses at punitive levels so they eventually leave the state.

Well, the piper has arrived. It's time to lay off workers in non-essential departments. It's time to CLOSE those departments. It's time to offer incentives to bring more business to the state, and to lower taxes on existing businesses so they can expand/grow (yielding more revenue).

Texas isn't having a problem, because they've done the above, and businesses are coming to the state in droves. In the open market, Texas is winning, because other states have been stupid.

Ted:
What you choose to call greed is what motivates people to take RISKS to start an expand businesses. That is a good thing, Ted.

I wonder why you don't mention the truly HUGE money grab by Democrats in Congress in forcing banks to "lend" money to people they KNEW could never pay it back. That program -- which Republicans tried to stop -- is far, far more directly responsible for this mess than your favorite bogeyman, Wall Street.

If you choose never to take risks, that's fine, Ted, but understand that you probably work for someone who DID. Envy is also greed, Ted.

Amen, Mrs. du Toit!!!

NC has always been a bag of nutcases when it comes to taxes no matter who was in charge. They've already had a "consumer use tax" to snag a share of taxes on internet sales for a few years now. I'm really only surprised it's taken this long for them to try this.

optu,

It can't be that simple, because New York did exactly that (in direct violation of the Supreme Court's current standing decisions on the matter), and although Amazon is suing New York State over it, they are collecting Sales Tax in the mean time and did not drop their affiliates. Either they regard NY as different from NC (perhaps they have too many affiliates there) or there is something more onerous in the proposed legislation in NC (such as what Opus17 wrote - that they would have to double-collect sales tax).

LOL all that work by the NC solons... and now they're going to get nothing for it.

NC is becoming more and more like a Northeastern seaboard state -- probably unsurprising because of the continuing influx of Northerners. (The same is becoming true of New Hampshire and its Massachusetts "settlers" as well.)

They got me the same way, since I live in NC. I went in to check, and my Affiliates account is already closed.

NC legislators are nutters. Did you know that they expect residents to claim out of state purchases in order to pay tax on those purchases, even though you already paid tax on them?

"... we still find the Greedy Hand Of Government thrusting itself into every corner and crevice of industry, and grasping the spoil of the multitude. Invention is continually exercised, to furnish new pretenses for revenues and taxation. It watches prosperity as its prey and permits none to escape without tribute.

--Thomas Paine (Rights of Man)

Louisiana assesses a 'use tax' on purchases made outside of Louisiana for 'use' in Louisiana. IIRC it is 8%, or roughly the average state & local sales tax. It is self-reported on the income tax return, so only applies to the honest Louisianians.

Amazon is a Dem-donating company, isn't it?

Let's clear the air about "sales tax on internet sales/purchases" and what the states are trying to do.

What most citizens do not know is every single state has TWO "tax imposing" statutes for this sort of 'excise tax' - one for "sales tax" and the other for "use tax". I believe everyone knows what a "sales tax" is. A "use tax" is the companion/corollary statute. The name "use tax" is misleading and does not equate to where you 'use' something. Sales tax is usually voluntarily collected/remitted by a vendor when selling to the ‘final consumer’. Use tax is supposed to be voluntarily remitted by the purchaser when the seller does not collect (enough) sales tax...IF the sales tax would 'normally apply' to the situation. For example, if you go out of state and purchase something you are going to use in your local area and the following applies (just one example...there are many others): If the sales tax rate you pay out of state is 4% and your local rate is 5% you would get credit for paying the ‘legally imposed 4% sales tax’ to the vendor but owe the 1% difference and should remit that to your local jurisdiction. Internet purchases are almost always a use tax scenario simply because of the misconception of the ‘internet is not taxable’. The federal moratorium on ‘taxing the internet’ ONLY applies to the access charge paid to the ISP.

The reason Amazon and most other internet retailers do not collect and then remit sales tax for most taxing jurisdictions is they do not have "nexus" = "a substantial business presence" (among other things) in a taxing jurisdiction. States, like NC and NY, are attempting (rightly or wrongly) to use whatever means necessary to establish nexus for internet based companies and these statutes are attempting to label the 'click-through associates' as 'agents for the company'. If they pass these laws then the courts will find, in accordance with that SCOTUS definition, that those associates do in fact create "a substantial business presence". This effort may or may not run afoul of the US Constitution's Commerce Clause. That will require these companies collect/remit sales tax and the state won’t have to rely on the good intentions of the purchasers to remit use tax. Please note: most sales/use tax statutes are ‘voluntary’ and I used the word ‘require’ in the previous sentence. Basically, if a business has nexus and wants to sell anything they HAVE to collect/remit sales and use taxes. If they don’t then the taxing jurisdiction may do all sorts of nasty things to them. One of which is sending someone like me to examine their records to establish what the business should have collected/remitted.

Use tax is a confusing little animal even for auditors sometimes. That is slowly getting cleaned up though thanks to a group of states that have signed on to the Streamlined Sales Tax Project (SSTP) and have adopted the SSTP sourcing rules. If you want to bore yourself to death, look up your local (probably state level) sales/use tax information (Departments of Revenue usually) and also the SSTP.

(I audit 'excise taxes' but am not employed by NC.)
NC Sales and Use Tax information
Streamlined Sales Tax information

All of you who are jumping on Ted are woefully uninformed about your state's (and even other local taxing jurisdictions) statutes and rules/regulations.

This is not a democrat / republican thing. This is that the state governments are broke because greedy wall street stole our confidence in American commerce. The states are grasping at straws to get enough money to keep police on the streets. Internet merchants have escaped state sales taxes. North Carolina tried to grab some revenue from in-state internet merchants, so their local Walmarts would not be at so much of a disadvantage. It does not appear to be working.

He is correct in the one sentence I bolded and italicized in his 2nd paragraph...his 1st paragraph is a rant for the most part.

'Use tax' is supposed to 'level the playing field' between in-state and out-of-state players inclusive of catalogue sellers and internet sellers. Where he fails being correct in his Wal-Mart sentence is "in-state internet merchants" are already subject to the NC sales tax statute IF the sell to in state customers. If they sell to an out-of-state customer then that state's Use Tax statute will apply to the customer (unless the seller has Nexus in that state, of course :) ). See how confusing it can get?

Thought you might like to see my take on the issue: http://nclawlife.com/2009/06/18/amazon-v-the-nc-general-assembly/

Well, I was planning on moving to North Carolina next year, aging parents and all that, but now as an internet marketer, I may have to change my plans and remain in Georgia.

Good job legislature. I would have been hiring people and creating jobs in your state, now it may be easier and more effective bringing my parents (taxpayers by the way) here.

Yes, this tax is somewhat confusing. That couldn't be by design, could it? Hurrah for Ms. du Toit. And Ted, well, whether you're right or not on your technical analysis of the taxation nexus, you're DEAD WRONG on NC or any one of a bunch of other states (particularly Calif. where I live) about them needing additional tax revenue to put police on the streets.
Clearly, no meaningful conversation or solution to balance a state's budget or the National budget can be made without getting rid of all the illegal "squatters" who've showed up here in our Nation from where ever in the world they've come from. One of the reasons this state, CA, is soooo far in debt is they're feeding, educating and giving medical care to these millions of illegals.
We cannot seem to take care of returning veterans and their families, but we can feed and nurture the illegal population. Have you ever asked yourself who's making the money and/or power on that deal?
Also, the NC tax deal once again shows the truth of the old adage that the two main character traits of politicians is they are 1. Greedy, and 2. Stupid.
Stan45

Now that, Stan45, is an entire comment I can get behind! :)

The legislature here in NC has been justifiably taking their lumps for this; but I haven't heard anyone take issue with Amazon for shutting NC Associates out of the program because they [the Associates] came out on the wrong end of a cost/benefit analysis.

Granted, the Associates Program Agreement probably allows for this kind of shutdown at AMZN's discretion; but part of me wonders why Jeff Bezos didn't do what so many other companies have done -- spend some money on a lobbying firm to come to Raleigh and plead their case.

Please let me know if I missed that; because otherwise it looks to me like Amazon is punishing its NC Associates so that they in turn will punish the legislators at the polls. That's certainly cheaper than spending shareholder $$$ on lobbyists; but "look what they made us do" seems a pretty poor return for all the revenue the AMZN Associates here sent to Bezos & Co.

The problem with all these internet taxing schemes is that sales tax currently inheres in the BUYER'S location, not the seller's. Also it is technically the buyer's responsibility to pay the sales tax, though sellers voluntarily collect it and remit it to the state as a courtesy to their customers. Each state has its own sales tax collection agency, and since each locality has control over part of their sales tax rate, there is a different tax rate for every locality. These rates change all the time; I get a quarterly bulletin from the state I'm in detailing all the sales tax rate changes.

So if an internet retailer were to collect sales tax for all her buyers, not only would she have to write 50 checks (one to each state) but would have to keep track of the sales tax rate for EVERY CITY in the entire U.S. of A. Now imagine that you, like me, are running an internet retail business out of your home, and it's just you. You don't have an accountant or an assistant or even a janitor. Add to that the fact that most people don't even know how to calculate sales tax even with a calculator, and you will see why all these sales-tax-on-internet schemes won't work.

Now, if they were to make sales tax inhere in the SELLER's location, that would be much easier. I'd charge everyone the same sales tax rate and write one check. But that would mean that states could compete for internet businesses on the basis of their sales tax rates, and we wouldn't want THAT, now would we?

'Use tax' is supposed to 'level the playing field' between in-state and out-of-state players

Such altruism! Curious the collected cash doesn't go to the local merchants, rather into state coffers.

Poor analysis, InfoGeek. Amazon provided a service; NC politicians decided to steal from them, over and beyond what that service was legally responsible for paying. So, they stopped that service. Why is this so hard for people to understand?
Several years ago, San Franciscans patted themselves on the back for passing a law punishing those eeeeevil banks who charge a buck or two for use of their ATM's by non-bank customers. The morning after the vote, just imagine the sad little looks on their smug f'ing faces as they realized that instead of getting free use of someone else's equipment and labor, they simply were unable to use the ATM at *any* price, because the bank simply refused to provide that service for free. Sounds like NC has a case of the same situation - trying to get something for nothing.

If the sales tax rate you pay out of state is 4% and your local rate is 5% you would get credit for paying the ‘legally imposed 4% sales tax’ to the vendor but owe the 1% difference and should remit that to your local jurisdiction.

So if I live in a state with tax rate of 4% and make a purchase in a state with a tax rate of 5%, does my home state owe me the 1% difference? Somehow, I don't think so.

Hey baboy, way to side with the greedy, thieving bankers against your fellow citizens. We should let them do whatever they want, right? It's thinking like yours that got us into this mess in the first place.

All of our tax money is being spent to brainwash people into communism. The public education system is a communist brainwashing program. ACORN is a communist brainwashing organization. If you began to "cut out" the program portions that are about communist brainwashing... we'd probably pay very few taxes.

(They could just give us vouchers for education and we could educate our own children where we choose - and just trim all the propagandizing out of public education and ppl might choose those schools for their voucher system. But we certainly don't need coerced communism through taxation with no choice by voucher of where to send children to school = public education).

Nobody, are we really talking about salestax here?
Or is NC trying to define Amazon as a North Carolina company because they have people with affilliate accounts there and declaring that because of that Amazon should pay corporate taxes in NC?
They could even redefine those affilliates as employees of Amazon and try to have Amazon pay income tax and social security premiums in NC despite those people not being on the payroll.

I've not read this bill, but if it's not about salestax it's got to be something like that.

Not that I ever made any substantial income off it, but my account was also closed, of course. I am irked beyond my ability to describe.

Is there some rule somewhere that says every activity must be taxed? Is it too much for politicians to keep their expletive-deleted hands to themselves for a change?

Rope, tree, politician. Some assembly required.

Just sent this to a few close friends:

'Found this on Insty:

http://confederateyankee.mu.nu/archives/289027.php

Guys, this is really starting to piss me off. So much so that I'm starting to look for alternatives. As in: moving to another state. The damn "Yellow Dog Democrats" down East will never elect a responsible government in Raleigh.

Note what Mrs. du Toit (of "Nation of Riflemen" fame) has to say about Texas gaining business in the comments. Businesses are leaving Kalifornia in droves. And I expect it to start in NC shortly.

Based on the "Freedom in the 50 States" report, I'm looking at Tennessee, Missouri and Texas. Colorado ain't bad but I'm not sure I want to winter there. Unfortunately I'm afraid most of the cheap land in Texas is gone unless you get up in the Panhandle...

BTW: if you haven't already, read "One Second After". This is not an "If it happens" scenario. It's a "When it happens"....

http://www.amazon.com/One-Second-After-William-Forstchen/dp/0765317583/ref=sr_1_1?ie=UTF8&s=books&qid=1246199976&sr=8-1'

Don,

Forget Colorado, we've been Californicated and are headinq quickly down the dumper with Ritter and a Dem controlled legislature.

Amazon has just done the same thing with Rhode Island affiliates, for the same reason. Where there was revenue, now there is none. Brilliant job, legislators.

@ RC,

Yeah, I know. But my Mom owns land in Colorado. Far enough away from Denver that I can mostly ignore it. I'm thinking of spending the summer at the ranch and winter in Tennessee or Missouri. I'd love to find a place in the Hill Country but I'm not sure it's do-able anymore...