Colorado Senate Majority Leader Beards Amazon | Hacker News Reader

Colorado Senate Majority Leader Beards Amazon

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4 pointsxiaoma9 comments

There's an amazing amount of heat, but little light on this, particularly regarding exactly what impact the legislation threatened to have on costs, labor, etc. for Amz, affiliates (exactly what is that? someone selling via Amz Marketplace?), and customers.

Huffington offers:

"The bill, which was part of a package of tax measures aimed at increasing revenue, originally sought to create a nexus between the state and on-line retailers based on their ties to local affiliate websites, which link to products. The bill was ultimately altered due largely to fears that retailers like Amazon would simply cut ties to Colorado companies that make money by referring buyers."

"The final bill, which was signed into law in February, instead required large online retailers to start collecting sales taxes or provide a summary of people's web purchases in the state, leaving affiliates out of the equation. This created an economic nexus without making local affiliates a scapegoat for paying local sales taxes." --http://www.huffingtonpost.com/2010/03/08/amazon-reacts-to-co...

...but Huff doesn't cite sources. Anyone find a better analysis by a dispassionate legal/financial source?

Well, RRW says (http://www.readwriteweb.com/start/2010/03/new-state-law-bump...):

"Online retailer Amazon has ended all Colorado-based affiliate accounts after a new law passed by the state's legislature would have forced them to collect and pay state sales taxes. The law, HB 10-1193, states that any affiliate marketer making more than $10,000 for a retailer is declared a legal agent, and a state presence, of that company. Rather than be forced to pay the state taxes, Amazon has instead side-stepped the law by closing its doors to all affiliates based in Colorado."

...though I think they're sloppy, too, speaking of Amazon being "forced to pay the state taxes" - when they seemingly would have to begin to collect sales taxes from customers, which could mean: • Figuring out the tax rate (which varies by city, county, etc) for each customer. • Charge a differential price to customers depending on the state/co/city of residence. • Either increase the charge to customer's CC or cut Amazon (or it's affiliate's) net on a sale. • Send on the $ to state gov.

Sounds to me like they just don't want hassle and cost of programming, processing etc.

Note another effect: When I buy a $2500 laptop from Apple online, I have consider the cost of where I want it shipped. If it goes to my office in town, I pay ~3% more sales tax than if I they ship to my out-in-county home.

If Apple can handle all that, so can Amazon, but if this is what the CO law will impose on national online retailers it will mean lots more issues for both customer and seller to weigh and start handling immediately.

Maybe it's equitable, but I sure wouldn't like to have to have all my business's billing software rewritten overnight.

From what RWW says further down, Amazon must already have the software in place - and be collecting it in NY state:

"The Colorado legislature should have foreseen this outcome - it's not the first time Amazon has been forced to shut down affiliate programs. In July of 2009, Amazon closed off their programs in Rhode Island and North Carolina, and has previously sued over a law passed in New York in 2008. The suit, however, was eventually thrown out and Amazon has since been paying taxes for New York affiliates they feel are too valuable to give up."

So I still don't see why Amazon is choosing to fight this battle with Colorado :/

Before watching this, I hadn't realized that

1) Others, such as B&N Apple have been complying with the burdensome regulations

2) The law in question has no actual connection to Amazon Associates, and canceling the Associate program doesn't actually save Amazon anything on sales taxes.

Not to be cynical, but does any of that change the fact that Amazon chose not to do business in Colorado with affiliates? Or that hundreds of Colorado affiliates are now out of a sales channel?

Must be some logical reason in there somewhere for Amazon. And I doubt this guy is going to explain it.

If you're as big as Amazon, retaliation might be a logical reason. Doing this does cause political problems for Democrats in CO, and it also lowers the income of CO affiliates, thus directly decreasing state income taxes and indirectly decreasing sales taxes, property taxes and anything else Coloradan affiliates might spend on.

This sort of retaliation will definitely be on the minds of the legislature of the next mid-sized state to consider doing something Amazon doesn't like.

Retaliation for what? According to this guy, it doesn't affect Amazon.

As I understand it, Amazon and others are required to collect purchase summaries and send that to Colorado, so that Colorado can collect (or enforce?) sales tax for online purchases.

So, it looks to me like Amazon is objecting to collecting the information and sending it to Colorado. My opinion is their public objection is to the administrative cost of doing this, but their real objection is erosion of their cost advantage, since the collection of information will lead to more tax collection by Colorado, resulting in a real cost increase to customers for Amazon products in Colorado.

Affiliates, which apparently have nothing to do with it, are merely a convenient, minuscule and vocal group for Amazon to throw under the bus.

As a vocal former Colorado Amazon affiliate, may I just mention that Tattered Cover, http://tatteredcover.com/ , is an excellent, large, Colorado (that ships nationally), independent book seller. They also have an affiliate program: http://tatteredcover.com/affiliate

I'm just sayin'.

I have trouble taking that state senator too seriously.

He's clearly outraged about "being bullied" by Amazon...

but it's less clear that he has done an cool-headed analysis of the impact of the legislation on all parties (Amazon, affliates, customers, state treasury).

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