BnPicked up the following from Business Wire:

Dear Amazon.com Affiliates,

We understand that Amazon.com has threatened to terminate its affiliate program in certain states that may enact e-fairness legislation that requires Amazon to collect sales tax due on purchases by residents in those states.

Barnes & Noble is disappointed to hear that Amazon would threaten small businesses’ livelihood rather than comply with state law. Here at Barnes & Noble, we value the 13,000+ members of our affiliate program worldwide. They are an important part of our overall business success and strategy. Barnes & Noble collects and remits sales tax due from its sales, including from BN.com, our e-commerce business.

Barnes & Noble wants Amazon.com affiliates who have been terminated to know that you are welcome to join the Barnes & Noble affiliate family. If Amazon doesn’t want you, we do! And, we will take care of collecting and remitting all sales taxes due on BN.com sales to its customers so you and our customers don’t have to worry about being hassled or prosecuted by state tax auditors.

If you are interested in getting started with Barnes & Noble, please visit us at http://www.barnesandnoble.com/affiliate and join today. We look forward to welcoming you to our team!

Sincerely,

John Foley
President of BN.com
Barnes & Noble.com

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4 COMMENTS

  2. Jesslyn: A retailer basically must collect sales tax for any state they sell to in which they have a “nexus”. The definition of a nexus varies from state to state, but it’s usually some kind of physical sales presence. A sales agent is pretty clearly a physical sales presence. Three states — Colorado, North Carolina, and Rhode Island — have passed laws declaring that a citizen running a web site with affiliate links is a sales agent because they get a commission on each sale made through the link. Thus, having even one affiliate in the state constitutes having a nexus there, and all sales from that company to that state must have sales tax charged. Amazon has already terminated all affiliates in those three states.

    It appears from the news reports that the Comptroller of the state of Texas unilaterally decided that the same applied in Texas. Also that Amazon’s warehouse in Texas constitutes a nexus. The Governor of Texas disagrees. Amazon is prepared to terminate all Texas affiliates and close its Texas warehouse if the Comptroller wins.

    By the way, in 2009 both California and Hawaii’s legislatures passed bills that would declare that a citizen running a web site with clickable ads that link to a retailer were sales agents for that retailer, even though they don’t get an actual commission on each sale the way that affiliates do. In both states, the Governors vetoed the legislation.

  3. We’re in for a squabble that may last for years. Fifteen years ago, collecting taxes from online sales hardly mattered to states and localities. Now it matters a lot, especially in states where the politicians spent money like there was no tomorrow during the boom years and now have to scramble to meet even austere budgets.

    During the boom in Seattle, where I live, after the voters refused to approve a billion-dollar-plus scheme for a sports stadium, the state legislature declared an ’emergency,’ held a special session, and approved it anyway. As an indirect result, this past summer in affluent Seattle we couldn’t find mere thousands to keep kids wading pools open. (And yes, I know the money comes from different budgets. One is the Well-funded Lobbyist Pool. The other is the Kids Who Can’t Vote Pool.)

    Now there’s a scramble to make up for all that waste. Using web links, with or without payments, is one scheme to provide the legal rationale to tax online sales when giant Amazon has avoided creating the usual legal presence in a state. But so far, all that has done is to deprive states of income (acquired at the national level) that those link associates earn. It hasn’t ended sales without sales taxation and may never do so. It’s quite possible that these states will lose more in lost taxes on that added income by their residents than they gain in a sales tax collection that Amazon will do almost anything to avoid.

    All this illustrates the ‘single bad apple spoils the barrel’ problem. Amazon’s refusal to pay taxes where those taxes are due, meaning in states where they operate huge distribution centers (Texas) or well-funded product development centers (California), is endangering associate linking by many other businesses and also the small link payments that keep alive special interest websites that benefit society.

    Amazon’s behavior and the legislative reaction also threaten to make life more complicated for thousands of small businesses that sell online. For them, collecting taxes for each state (much less each locality) is burdensome and costly. For Amazon, it’s no more than flipping a software switch. But because the 800-pound gorilla refuses to play be the rules, thousands of small online firms are likely to get burdened by still more rules and taxes that cost more for those businesses to collect than they bring in for the states.

    That’s a shame.

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