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Amazon Cuts Off Colo. Affiliates Because Of Tax

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Mar 8, 2010 7:50 pm US/Mountain

Amazon Cuts Off Colo. Affiliates Because Of Tax

Reporting
Mike Hooker
DENVER (AP/CBS4) ― Amazon is cutting off affiliates that help it sell products in Colorado because of a new tax on online sales.

Affiliates earn money by using their Web sites to link customers to online sellers like Amazon.

Amazon told affiliates in an e-mail on Monday it would no longer pay them advertising fees because of the new law.

Ray Krueger Koplin's map of Costa Rica is the main item he sells online from his home in Fort Collins. His Web site also has a bookstore which, until Monday generated commissions from Amazon.

"At midnight last night they just switched it off. No warning," he said. "I'm not really sure who I should be angry with -- them for responding in this way or the legislature for passing this at-best, questionable law."

The law says online retailers have to start collecting state sales tax themselves or send annual notices to customers telling them to pay the tax.

Amazon says the law is cumbersome and no other state has similar rules.

"(The law) clearly intended to increase the compliance burden to a point where online retailers will be induced to 'voluntarily' collect Colorado sales tax -- a course we won't take," Amazon said in the e-mail.

Affiliates feared the tax would hurt them and lawmakers changed the bill to try to prevent them from being harmed.

Gov. Bill Ritter criticized Amazon.com's decision to end its financial relationship with Amazon Associate businesses in Colorado.

"Amazon has taken a disappointing – and completely unjustified – step of ending its relationship with associates. While Amazon is blaming a new state law for its action, the fact is that Amazon is simply trying to avoid compliance with Colorado law and is unfairly punishing Colorado businesses in the process," Ritter said in a statement.

"My office worked closely with Amazon's affiliates and associates to modify House Bill 1193 to specifically protect small businesses, avoid job losses and provide a fair, level playing field for on-line retailers and Main Street, brick-and-mortar retail shops alike," said Ritter. "Amazon's position is unfortunate, and Coloradans certainly deserve better."

(© 2010 CBS Broadcasting Inc. All Rights Reserved. This material may not be published, broadcast, rewritten, or redistributed. The Associated Press contributed to this report.)

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