Amazon Threatens to Kill the Affiliate Program in Illinois in Response to Proposed Tax Bill

Amazon is throwing a minor temper tantrum in response to a new tax bill recently passed by Illinois Governor Pat Quinn, and it could leave affiliate members in the state high and dry if it gets signed into law. A sharply worded e-mail sent out to Illinois based affiliates late last week makes Amazon’s position on the matter quite clear. "We regret to inform you that the Illinois state legislature has passed an unconstitutional tax collection scheme that, if signed by Governor Quinn, would leave Amazon.com little choice but to end its relationships with Illinois-based Associates”.
Illinois law currently only requires a 6.25 percent sales tax be collected by organizations with a presence in the state, but the new law seeks to redefine this “presence” to include affiliates who help Amazon link to product pages. Realistically this move shouldn’t have affected tax revenues in the state because residences are required to pay a “use tax” already, but they have no way to prove you wrong should you choose to bend the truth come tax time. The new law would require Amazon to collect the tax in this case rather than relying on individual honesty, and as you could imagine, this would probably be bad for business.
Hopefully this move will make Illinois lawmakers think twice since Amazon has proven in the past that they are more than willing to follow up on their threats. The online retailer has already closed its affiliate program in Colorado, Rhode Island, and North Carolina for similar reasons.
Comments
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someuid
January 10, 2011 at 4:04pm
Amazon pays something like a 4% corporate tax rate. Poo Hoo. Pay up Amazon, just like the rest of us have to.
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ShyLinuxGuy
January 09, 2011 at 8:51pm
I think it's funny when companies throw temper tantrums. I don't remember very well if Microsoft raised its prices on software for the government sector as retaliation after the DoJ went on their monopoly witch hunt--did they?
I think governments need to be a little bit more careful about their tax schemes. Washington state lost the opportunity to have Boeing build all the 787s over here, because one of the main reasons was because our governor/legislators were adamant with their tax "rate" with Boeing's new plant and the income it would generate, and would not haggle. The governor claimed that Washington state government could not afford to reduce taxes for Boeing's new plant. Well, what she doesn't know is that some tax revenue is better than no tax revenue, and now I'm sure she's regretting the decision (HUGE state financial crisis). Boeing has the 787s in South Carolina because we, as a state, were not open to negotiation, and Boeing pays NOTHING to Washington for 787 production. Illinois needs to take a hint and try to renegotiate with Amazon, such as offering to pay for the software and responsibility to collect the tax (that's all I could think of; I know it's kind of lame).
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raptorspike
January 09, 2011 at 6:07pm
As a resident of Illinois, I know almost for a fact Amazon will probably end up leaving. Illinois is run by a bunch of money-grubbing lawyers and politicians.
And I don't mean to sound ignorant, but can someone explain the affiliate program? I have a vague idea based on the articles I've read.
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roninnder
January 09, 2011 at 5:16pm
I've seen several stories like this one, can someone please more fully define the role the affiliates play? What does "help Amazon link to product pages" mean? Are they advertisers or marketers?
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Justin.Kerr
January 09, 2011 at 7:13pm
Affiliates are basically anyone who posts a link to an Amazon page, and includes their custom ## in the URL. If someone goes to your site, follows the link with your Affiliate code, they earn a commission on your purchase. If you live in Illinois then you are a local affiliate based on this law.
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syderwarp
January 09, 2011 at 4:43pm
I live in Chicago we have past Govener in Jail. The current Mayor was brought under heat for corruption by FBI. Corruption is a main reason compouned by fraud, inflation,etc. Taxes are out of world in Chicago, Cook County, as well as Illinois verses the other states in area. This is a big scam to push venders out of Illinois to pay for fat cats in Springfield!!! I hope this bill gets canned! I agree with Amazon and buying products online with no taxes. The answer would be drop the taxes for national sales taxe not Income,payroll, State, county, enetertainment, beverage, utility taxes!! That puts taxes around 40-50% for Illinois residents!!!!!!
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I Jedi
January 09, 2011 at 3:49pm
I pray to god my state never gets wind of the fact that they could try to line their pockets by passing such initiatives.
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Techie714
January 09, 2011 at 3:31pm
This is just another cheap way for the state to try and collect more revenue. I hope Amazon wins in this one!
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