States are broke so they are looking for loopholes to steal some money. When the affiliate nexus tax was passed in Illinois, Amazon dropped all their affiliates here and tons of bloggers and small niche site owners lost their income they count on every month.
When Amazon announced their decision to drop Illinois affiliates it was condemned by the law makers and the Illinois governor even offered a program to provide alternatives for those who got affected by Amazon’s decision.
Give me a freaking break! Did you see their proposed program? You can check it out here.
It’s a joke! I mean not only they don’t provide any substantial answers, they try to tell us that Amazon is exploiting a loophole.
The system is one that is antiquated and needs to modernized for 21st Century commerce as brick-and-mortar businesses are at a significant, competitive disadvantage as they are collecting the tax as required by law, while retailers operating on the Internet are exploiting a loophole that allows them to forgo collecting the sales tax at the point of purchase despite the fact that it is still due.
The only people who are exploiting a loophole are the law makers!
Amazon does NOT have physical presence in Illinois so why should they pay tax on sales made by affiliates. Looks to me like the law makers need a lesson about affiliate marketing.
An affiliate is just someone who gets paid for advertising the merchant’s link on their site.
If you display Adsense on your website you are also an affiliate of Google, but this doesn’t apply to them, why?
Here is another quote from their so called “Stand With Main Street” program.
Online-only retailers are exploiting a massive loophole that puts small brick-and-mortart businesses at significant disadvantage…
Whose fault is that? Why should Amazon be punished for smart business decisions? Brick-and-mortar businesses should have jumped on the internet bandwagon years ago. Now they are whining because they missed the boat.
Here is an example:
Blockbuster went bankrupt because they didn’t get on the internet fast enough. They sat and watched as Netflix crushed them. Blockbuster CEOs should have been fired long time ago!
Everything is moving online so get with the program or perish!
So we should just stay in the Stone Age because some small shops can’t make sales? Maybe they need a different marketing angle to compete. Believe it or not, the really small shops have an advantage over Amazon because they offer something that Amazon cannot.
– Personality (l like going to small shops because I know the people there personally and they provide good service)
– Instant gratification – I pay now and I get it without waiting or taking chances on DOA
So who is really complaining about Amazon’s unfairness? (cough cough…Wal-mart, Best Buy)
What the law makers don’t realize is that Amazon doesn’t need its affiliates anymore. If you go to Google and search for any product Amazon has top search engine rankings almost 98% of the time.
The small affiliates basically were able to get in front of that traffic and presell the customer before sending them back to Amazon.
The proof is in the pudding! When you send someone to Amazon most people will buy stuff you didn’t even promote. I would see commissions for sales of products I never even heard about weeks after I sent people there because they added stuff to their shopping cart. So the fact is that the customers you send to Amazon most likely already purchased from them before.
I highly doubt that dropping affiliates will hurt Amazon in a big way, but I know that it will hurt the people who counted on that income every month. So in reality, since the income made by affiliates is now lost, the state won’t even get any income tax they used to get. Oops!
Now other states are trying to follow and pass similar laws. Outrage!
This law is unconstitutional and some courts are realizing it…I hope Colorado stops this bill.
If you are an affiliate from one of the states that is trying to enforce this ridiculous law don’t give up. There are legal workarounds! Here is a link to an affiliate from New York who didn’t let them bully him.
There is simply no way I would want to promote some other merchants. Amazon’s conversions are killer and people love shopping there.
If you have been dropped from Amazon affiliate program there are a few things you can do to get back in 🙂
– Move to a different state (Like FatWallet taking jobs, income tax to a different state that appreciates your business)
– Set up an LLC in a different state (Establish yourself as employee of the LLC)
– Use someone else’s affiliate link and charge for advertising 😉 (Contextual ads are not affected by this law)
In my opinion this law is an absurd. It’s just a lazy way for the state to try to squeeze some money from their citizens.
We shouldn’t let them do this to us. I encourage you to fight this any way you can. Amazon is being singled out and it’s unfair to them.
Here are some other interesting links I found that you should check out:
– Illinois will crush affiliate marketing if you don’t act now (Perry Marshall’s blog)
– Hawaii Governor Vetoes Amazon Tax Law (Keep it up)
– Supreme Court: Sales Tax on Mail Orders (Similar case ruled in favor of out of state publishers selling subscriptions)
So I am glad to see that this is not going to go down without a fight. This law has only crippled the small business owners and affiliates that are looking for ways to generate some extra income.
Anyway, don’t give up on Amazon so easily and find a way to get back into their affiliate program. Don’t let them take away your income.
Instead of going after small US affiliates the law makers should impose some kind of laws on affiliates outside of USA who are raking in the money because they don’t need to obey some of the ridiculous laws we have to. International affiliates get away with not disclaiming they get paid for recommendations. They don’t have to pay income tax in some cases, but yet they advertise in US and making money hand over fist from sales made by US citizens.
But I guess they would rather screw you than try to help you.