This email was just sent to me this morning. Apparently, a new Arkansas tax law now states you must collect tax if you are an online retailer, even if referred product purchases. Read Amazon’s side of the story (below) and an article in the Arkansas Times.
For well over a decade, the Amazon Associates Program has worked with a large number of Arkansas residents. Unfortunately, a new state tax law signed by Governor Beebe compels us to terminate this program for Arkansas-based participants. It specifically imposes the collection of taxes from consumers on sales by online retailers – including but not limited to those referred by Arkansas-based affiliates like you – even if those retailers have no physical presence in the state.
We opposed this new tax law because it is unconstitutional and counterproductive. It was supported by big-box retailers that seek to harm the affiliate advertising programs of their competitors. Similar legislation in other states has led to job and income losses, and little, if any, new tax revenue. We deeply regret that its enactment forces this action. The unfortunate consequences of this legislation on Arkansas residents like you were explained to the legislature, including Senate and House leadership, as well as to the Governor’s staff.
As a result of the new law, contracts with all Arkansas residents participating in the Amazon Associates Program will be terminated on July 24, 2011. Those Arkansas residents will no longer receive advertising fees for sales referred to Amazon.com,Endless.com, MYHABIT.COM or SmallParts.com. Please be assured that all qualifying advertising fees earned on or before July 24, 2011 will be processed and paid in full in accordance with the regular payment schedule.
You are receiving this email because our records indicate that you are a resident of Arkansas. If you are not currently a resident of Arkansas, or if you are relocating to another state in the near future, you can manage the details of your Associates account online. And if you relocate to another state after July 24, 2011, please contact us for reinstatement into the Amazon Associates Program.
To avoid confusion, we would like to clarify that this development will only impact our ability to continue to offer the Associates Program to Arkansas residents and will not affect their ability to purchase from www.amazon.com.
We have enjoyed working with you and other Arkansas-based participants in the Amazon Associates Program and, if this situation is rectified, would very much welcome the opportunity to re-open our Associates Program to Arkansas residents.
Regards,
The Amazon Associates Team
Serious repercussions will result from this new law. Already, businesses who use Amazon’s systems to sell books, music, and more are making plans to lay off workers and move out of state. While brick-and-morter businesses shouldn’t be the only ones to pay taxes, a better method of transition and further discussions with large companies, such as Amazon, should probably have been made.
Will this new law effect your business? Let us know.
~Eric