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  1. #1
    Advocate mellie's Avatar
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    Colorado Dropped by Amazon
    To make sure no one misses it, Amazon terminated Colorado Affiliates. Mentioned in 2 other threads but it may get overlooked. Important to read and understand what is going on in Colorado.

    http://forum.abestweb.com/showthread.php?t=129127
    http://forum.abestweb.com/showthread.php?t=130342
    Melanie
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  2. #2
    Analytics Dude Kevin's Avatar
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    Not surprising at all. Claiming victory there was very premature, even though the "affiliate portion" was removed. The "affiliate portion" isn't enforced in New York either, technically, but it made no difference.

    I feel horribly for all Colorado affiliates affected by this. This is a big brick to fall. I hope it's the last.
    Kevin Webster
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  3. #3
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    I am a Colorado affiliate. Amazon sent me my good-by email this morning.

    Am considering forming a corporation or LLC in Wyoming, any tips? Seems the startup costs would be less than I make in a month with Amazon. I am not particularly concerned about the paperwork of running a corporation, as I already operate that way in Colorado.

    Why Nevada? Of the the states where you can do this easily, seems that Delaware is more for really big businesses. So considered Nevada and Wyoming, and liked Wyoming better, just from websurfing a bunch of sites.

  4. #4
    Moderator MichaelColey's Avatar
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    You may want to read this thread, particularly Mark's post (#15):

    Any solutions without moving?
    Michael Coley
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  5. #5
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    Quote Originally Posted by MichaelColey
    You may want to read this thread, particularly Mark's post (#15):

    Any solutions without moving?
    Thanks! Very interesting. I am not convinced by Mark, but his ideas are well worth reading and considering. I found the comments of chrisk to be useful as well. Not many things will take me to a lawyer, but this issue might

  6. #6
    Affiliate Manager qualityunit's Avatar
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    You will need to start promoting merchants outside USA. :-)

    ... only what I'm afraid, that European Union will follow US "affiliate" laws
    [SIZE=3][FONT=Arial]Viktor Zeman[/FONT][/SIZE]
    [B][URL=http://www.qualityunit.com/]Quality Unit [/URL][/B] Founder and [B][URL=http://www.qualityunit.com/postaffiliatepro/]Post Affiliate Pro[/URL][/B] developer

  7. #7
    Outsourced Program Manager Angel Djambazov's Avatar
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    Hi Melanie,

    Great write-up you did on the "whys " behind Amazon's decision. I think it was some of the best analysis I've seen out there.

    Angel
    Angel Djambazov
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  8. #8
    Advocate mellie's Avatar
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    Thanks Angel.
    I followed up with another post that urges other merchants to seek their own counsel and not follow blindly. I want to make sure others know that there is more to this and that removing affiliates will most likely have no effect. Again, not a lawyer so everyone should seek advice of their own professional counsel.
    Melanie
    President - Affiliate Advocacy 2008 ShareaSale Performance Industry Advocate Award, 2009 Affiliate Summit Pinnacle Award - Affiliate Advocate
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  9. #9
    Analytics Dude Kevin's Avatar
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    Exactly right, Angel. Great post at Affiliate Advocacy. It's been Amazon's stance since the NY debacle, but a lot of the #noadtax people tend to forget that.
    Kevin Webster
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  10. #10
    Beachy Bill's Avatar
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    Quote Originally Posted by mellie
    Thanks Angel.
    I followed up with another post that urges other merchants to seek their own counsel and not follow blindly. I want to make sure others know that there is more to this and that removing affiliates will most likely have no effect.
    Again, not a lawyer so everyone should seek advice of their own professional counsel.
    Interesting...and...perplexing...for sure. My tax attorney, who is in Delaware, charges $300 per hour. I paid him dearly to set up our corporation last year - and it was well worth it, so I am not complaining about his fee schedule. However, It is difficult to get in to see him and I'm not sure how well informed he is, or will be, about this new Colorado legislation. I'm sure we are not the only small company in this situation - debating whether or not to seek 5, 10, or more hours of legal research/advice to keep doing business in each of these states.

    Currently, our corporation is located in Delaware, a state with no sales tax. Our printing company is located in Illinois - and our shopping cart already charges sales tax (and the printer with whom we contract remits it) to the State of Illinois - for orders being shipped to Illinois.

    But for Colorado and the other states...we'll do more reading searching and "asking" to determine in which direction we should head.
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  11. #11
    Affiliate Marketing Consultant Linda - 5starAffiliatePrograms's Avatar
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    I don't think anyone has posted this yet. If they have and I missed it, I apologize. The Governor responded to Amazon's move to drop affiliates.
    Amazon Pulls Affiliates Out of Colorado, Gov. Ritter Responds

    So is this just some kind of political game that affiliates got caught in the middle of??? Sure is terrible for CO affiliates!

    I posted this in another thread, but CO merchants really need to read Mel's latest post at Affiliate Advocacy before they decide what to do!
    http://affiliateadvocacy.com/2010/what-will-guide-you/

  12. #12
    ABW Ambassador simcat's Avatar
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    Was kind of surprised to see this was the lead story on 9news tonight. wow
    Course, they didn't go into much detail on it.

  13. #13
    ABW Ambassador delsol's Avatar
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    Quote Originally Posted by MichaelColey
    You may want to read this thread, particularly Mark's post (#15):

    Any solutions without moving?
    Mark rock's. But as he posted here (#9):
    http://forum.abestweb.com/showthread.php?t=130342

    We are dealing with a different situation in Colorado. The Colorado law does not define affiliates as the cause of nexus (please pause and reflect on that). The Colorado law went a lot further then the "NY law". It basically said "we require out of state merchants to collect sales taxes PERIOD". Now we are seeing a strategy game between Colorado and Amazon.

    As an "analytical chess" player, I would say the "move" by Amazon is good. But the next move by Colorado could also be interesting. The next "move" for Colorado might be to actually "bring to court" (and probably settle) some small to medium size merchant that does not apply their state law.

  14. #14
    Analytics Dude Kevin's Avatar
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    Good point Del Sol. As a merchant, I won't worry about affiliates. I'll just stop selling to Colorado when I hit a predetermined annual number in revenue there (tongue in cheek of course).

    Amazon used affiliates as a pawn and a punishment in this case. Shame on Amazon for that, even though they had previously stated very publicly that they would.
    Kevin Webster
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  15. #15
    ABW Ambassador La_Valette's Avatar
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    You may want to read this thread, particularly Mark's post (#15):

    Any solutions without moving?
    The short summary without reading all that thread is that it's where the actual work is performed that matters for tax purposes, not where you set up a corporation and/or mailing address.

    You may be successful for a while in concealing your activities by the corporation in another location but that would be fraud and if discovered at any point you could potentially be held liable for the damages the merchant would be facing as a result of your activities.

    There is no easy-way-out solution to this problem. The only way forward is to work together on defeating these idiotic affiliate tax laws.
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  16. #16
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    One important point that occurred to me during Mellie's conference call today is that Amazon is different from other merchants, because Amazon has many other "nexus" problems (in most states) than any other merchants. For Amazon, it is entirely possible that a court might eventually conclude that the "totality" of its activities (perhaps including its associate program) created nexus in Colorado, but other merchants don't have such wide-ranging activities in other states.

    As such, she and others are absolutely correct that other merchants should not reflexively do what Amazon did in Colorado.

    It's also important to recognize that the Colorado law, if it could be enforced, would place a much greater burden on merchants because it doesn't provide any "way out" -- it requires out-of-state merchants to compute and inform consumers of their sales tax obligation; the state doesn't recognize any "nexus" requirement.

    The Colorado law may also create consumer "push-back" because consumers don't want their private transaction information shared with the state (in fact, that might be the real intent of the law: to discourage Colorado residents from buying online).

    The "consumer privacy angle" might win Amazon more positive attention if it chooses to litigate in Colorado, and of course the "bare naked unconstitutionality" of the Colorado law is even clearer than in the advertising-nexus laws, so it's entirely possible that Amazon could quickly win an injunction (but it's now had the experience of being "home-towned" in the New York court, where a state judge made an absurd ruling against the out-of-state company).
    Last edited by markwelch; March 9th, 2010 at 01:08 PM.

  17. #17
    ABW Ambassador delsol's Avatar
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    Quote Originally Posted by La_Valette
    The short summary without reading all that thread is that it's where the actual work is performed that matters for tax purposes, not where you set up a corporation and/or mailing address.

    You may be successful for a while in concealing your activities by the corporation in another location but that would be fraud and if discovered at any point you could potentially be held liable for the damages the merchant would be facing as a result of your activities.

    There is no easy-way-out solution to this problem. The only way forward is to work together on defeating these idiotic affiliate tax laws.
    La Valette with all due respect, you might be missing the point. As Mark just pointed out " the state doesn't recognize any "nexus" requirement."

    To extrapolate on that point, without "nexus requirement", the residency of the affiliates is irrelevant to the state law. Please pause and reflect on that.
    Any solutions without moving?
    The residency of the affiliate is important for nexus (ala NY law) but since nexus is out of the picture the question is still very valid. It becomes a "private" issue between the affiliate, her corporation and the merchant...

    Of course, you can't answer that question without seeing the individual affiliate agreements. But the difference between where a business is incorporated and where the employees of that corporation reside could become a very valid "nuance".
    Last edited by delsol; March 9th, 2010 at 01:34 PM.

  18. #18
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    Here is an email that another Coloradan received from Sen. Morse of the Colorado state senate, with my friend's last name removed at his request.

    I would be VERY interested in comments about what choices we Colorado Amazon ex-affiliates have, given these particulars. I have studied these threads about nexus, but I wonder if in this case I might be within my legal rights to start a Wyoming LLC or corporation, report it to CO as a foreign entity doing business in CO, and apply to Amazon as affiliate with that company. I am close enough to Wyoming (a few hours drive) that I could actually do some of my work by running up to WY.

    We have operated in CO for years as a C corp and I have no intention of moving that corporation. This would be an add-on. We have been earning enough from Amazon that I am not willing to just say bye bye without being sure that I must.
    ==========
    Mr XXX,

    This may qualify as an understatement, but I see we disagree. I get your frustration and I get that you are entitled to it. What you are not entitled to are you own facts.

    Before we passed HB 10-1193 Amazon.com <http://Amazon.com/> paid zero in sales or use tax to Colorado. After we passed the bill they are required to pay zero in sales and use tax. What the bill did was require them to notify the state and their Colorado customers as to the total amount of purchases from them and any other on-line retailer who elects not to collect sales tax at the point of sale on an annual basis, similar to a 1099 or W-2 that is submitted to the IRS. What Amazon's affiliates have to do with this is... well nothing. Eliminating the affiliates saves Amazon exactly zero in tax since they still owe zero in tax. What it saves them in administrative burden is zero since they still have to comply with the new law and notify Colorado customers and the State of Colorado of the total amount of on-line purchases. That means they cancelled their affiliate contracts for no valid business purpose. It had to be just because they could and they wanted to intimidate any other state that might think it wants to collect a tax that is already legally owed by consumers.

    This action is arbitrary and capricious, and metaphorically, that is the equivalent of spitting in our face as this will cost some of our residents income for no valid business purpose.

    In any event, Colorado is on the brink of having to close schools, prisons, and colleges, so in my view, I have a duty to collect all tax that is legally owed. That is what this bill did, but in the process we angered a large corporation that made $902 million last year. They have plenty of weight to throw around and are doing so.
    I appreciate your comments and our right to disagree.


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  19. #19
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    While affiliates are the pawn in this politic game, all of Colorado will be the losers. This is the law that the corporate lawyers are going to put their teeth into and bring it down.

    Closing schools has nothing to do with it, a very large, vocal book consortium that wants people to stop shopping online does.

    That's the "elephant in the room". The offline booksellers (many who DO have websites - irony or hippocracy?) just plain don't want people to shop online anymore, and they are using the sales (and use) tax as their bargaining chip. They *know* that if all online companies are required to follow the Colorado law, and the other laws being "updated" or passed, that they physically can't. They think they can *Shut Down Online Commerce at least from their competitors that sell books online for much less than they can or do in the b/m stores.

    And *that* is interfering with freedom of commerce.
    Deborah Carney
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  20. #20
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    Interesting overview, Loxly. Online shopping is here to stay, duh.

    Here is a snippet from another online friend of mine, used with his permission:
    ===
    Amazon still has to comply with the law whether the sales comes through an affiliate referral or not. If I, in New Jersey, refer a Colorado customer, they still have to do the same paperwork as if a Colorado affiliate sent the customer. They didn't fire me. It sounds like a class action suit waiting to happen.
    ===

    I wonder about that class action suit idea, but kinda doubt it would get me my account back, partly because it wouldn't be anytime soon, but also because the Amazon affiliate TOS basically say "heads Amazon wins, tails affiliates lose."

  21. #21
    Newbie jbrasco951's Avatar
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    If you want some additional insight. On WebmasterRadio's Inboxed Radio show, Bennett Kelley of the Internet Law Center and Kevin de Vincenzi of XY7 weighed in on the letter sent by Amazon to the Colorado merchants. They discussed how they found the decision "suspect".

  22. #22
    Affiliate Manager Alan Hamilton's Avatar
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    Morse typifies the tax and spend mentality that believes the answer to all budget problems is to raise taxes and spend more. What is enough tax Mr. Morse? Once you have enough, you spend more and then you raise taxes again so you can balance your out of balance spending. This cycle has repeated itself over and over again in every state when it is controlled by those who believe that there is no such thing as enough taxation. This mindset is dispicable and Mr. Morse epitomizes the irresponsibility of the CO statehouse leadership. Pathetic... nuff said.
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  23. #23
    Life is Supposed to be Fun! Rexanne's Avatar
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    Quote Originally Posted by Alan Hamilton View Post
    Morse typifies the tax and spend mentality that believes the answer to all budget problems is to raise taxes and spend more. What is enough tax Mr. Morse? Once you have enough, you spend more and then you raise taxes again so you can balance your out of balance spending. This cycle has repeated itself over and over again in every state when it is controlled by those who believe that there is no such thing as enough taxation. This mindset is dispicable and Mr. Morse epitomizes the irresponsibility of the CO statehouse leadership. Pathetic... nuff said.
    Alan, while I also am aghast over this law passing in CO, I don't think this has anything to do with raising taxes - it's about collecting taxes they feel are rightfully due the state of CO and that's an entirely different argument. I suspect you're letting your political (ooops did I say that word?!) feelings interfere with the actual facts.

    The key here is to look at the facts. Amazon might decide to end its affiliate program altogether and in all states, just because it *can.* Think about that for a minute.
    Peace,

    Rexanne

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  24. #24
    Affiliate Manager Alan Hamilton's Avatar
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    Quote Originally Posted by Rexanne View Post
    Alan, while I also am aghast over this law passing in CO, I don't think this has anything to do with raising taxes - it's about collecting taxes they feel are rightfully due the state of CO and that's an entirely different argument.
    Rex, the internet tax law was only 1 of 13 new tax bills that our legislature passed during the same time period, and only one of dozens that our legislature has tried to create the past four years. THAT is about raising and creating taxes. I and my programs are not affected by HB 1193 but as a Coloradan I AM concerned for my fellow Coloradans. That Morse & Co "feel" that these newly created taxes are "rightfully due" the state is where the problem lies and that is a far bigger issue than the internet sales tax. My previous statement probably walks the "P word" wire and this is not the place for that, so I will not comment further, but thanks for the reminder.
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  25. #25
    ABW Ambassador Daniel M. Clark's Avatar
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    Quote Originally Posted by Rexanne View Post
    The key here is to look at the facts. Amazon might decide to end its affiliate program altogether and in all states, just because it *can.* Think about that for a minute.
    And I believe they would. They haven't had respect for their affiliates in quite a long time (just looking at their commission %'s and terms), and although I haven't seen the numbers, I simply won't believe that a significant amount of their business is due to affiliate-driven traffic. Amazon is a household name now. At some point, brands become so powerful, so pervasive, that they don't need affiliates - affiliates become supplemental. If Amazon is in that position, and I believe they are, then they could very well shut down the Associates program nationwide if it meant they could avoid collecting sales taxes.
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