Amazon invites Hawaii affiliates back after sales tax skirmish |
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Amazon invites Hawaii affiliates back after sales tax skirmish
Amazon.com last month cut off its affiliates in Hawaii as part of an escalating battle with states over sales tax collection. But now that an effort to force Amazon to collect sales tax died in the Hawaii state legislature, the online retail giant is inviting its affiliates there back. In a message posted on its Associates blog, Amazon thanks Hawaii affiliates for their patience and says it hopes they will re-enroll in the program.
Affiliates are websites that drive traffic to Amazon sites and products in exchange for a cut of resulting sales, and play a role in Amazon's ecommerce business. But they've become the focal point of a struggle between Amazon and cash-strapped states over sales tax collection. A variety of states, following the lead of New York, looked to classify Amazon as a physical retailer through its work with local affiliates -- and thus require the company to collect sales tax on purchases (Amazon currently collects sales tax in only a handful of states).
But Amazon -- apparently believing sales tax would be a turnoff to cost-conscious consumers during the recession -- struck back, cutting off affiliate programs in states, including Hawaii, that were advancing such legislation. In Hawaii at least, Amazon's brinkmanship worked. Here's Amazon's note to Hawaii affiliates:
Earlier this month, Governor Linda Lingle vetoed the unconstitutional tax collection scheme passed by the Hawaii legislature in HB 1405. Because the effective date of that bill preceded both her veto and the legislature's veto override session, we had little choice but to end our advertising relationships with all Hawaii-based participants in the Amazon Associates Program. Now that the override session is over, and the legislature did not override Governor Lingle's veto of HB 1405, we would like to invite all Hawaii Associates whose accounts were closed due to the pending legislation to re-enroll in the Associates Program.
Amazon had also cut off affiliate programs in North Carolina and Rhode Island over sales tax collection (California got a warning letter, but Gov. Schwarzenegger vetoed a similar bill there). I've asked Amazon for an update on affiliate programs in those states.
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