Amazon ended partnerships with all Illinois affiliates this past week due to a new tax law.The Illinois state legislature, seeing the large sums their own residents aren’t paying in sales tax, wrote a new law targeting online retailers, and in particular any with an affiliate (or some other type of agent) inside the state.
So now Illinois joins Colorado, Rhode Island, and North Carolina where the affiliates got screwed because the state got stupid.
Here’s a couple details you might not know about Amazon and sales tax. They already collect it in 5 states: Kansas, Kentucky, New York, North Dakota, and Washington. Why those 5? Probably becuase that’s where they actually have operations.Also, they fought and lost a lawsuit against an “affiliates law” in NY, which is why they collect it there.
You might recall that Amazon fought Texas over collecting sales tax, which is a little strnage considering they already pay it elsewhere. One detail I didn’t know until a commenter told me was that in his professional opinion, Amazon were right and Texas Comptroller’s Office was wrong. Amazon were actually complying with the law as written. I don’t claim to know anything about tax law, but given that Amazon already collected taxes elsewhere while fighting Texas, I’d say he’s probably right.
I’m all for states collecting the taxes they’re due, but our system is a little screwy. As sales tax is currently set up, a buyer has to pay it but a retailer has to collect it. Now, if you buy something online, you’re required in most states to report the tax yourself. Unfortunately, there’s no system set up to enforce it. Until the internet, there really wasn’t much need.
P.S. If you’re wondering why Amazon didn’t drop their NY affiliates, it’s probably because the lost sales would hurt too much. New York might have had a high concentration of affiliates.