Breaking news - all Colorado based Amazon.com affiliates received a distressing e-mail this morning and that was their affiliate accounts had been closed due to a new law the Coloardo Legislature just passed.
The e-mail Amazon.com sent out was this:
"Dear Colorado-based Amazon Associate:
We are writing from the Amazon Associates Program to inform you that the Colorado government recently enacted a law to impose sales tax regulations on online retailers. The regulations are burdensome and no other state has similar rules. The new regulations do not require online retailers to collect sales tax. Instead, they are 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.
We and many others strongly opposed this legislation, known as HB 10-1193 , but it was enacted anyway. Regrettably, as a result of the new law, we have decided to stop advertising through Associates based in Colorado. We plan to continue to sell to Colorado residents, however, and will advertise through other channels, including through Associates based in other states.
There is a right way for Colorado to pursue its revenue goals, but this new law is a wrong way. As we repeatedly communicated to Colorado legislators, including those who sponsored and supported the new law, we are not opposed to collecting sales tax within a constitutionally-permissible system applied even-handedly. The US Supreme Court has defined what would be constitutional, and if Colorado would repeal the current law or follow the constitutional approach to collection, we would welcome the opportunity to reinstate Colorado-based Associates.
Your Associates account has been closed as of March 8, 2010, and we will no longer pay advertising fees for customers you refer to Amazon.com after that date. Please be assured that all qualifying advertising fees earned prior to March 8, 2010, will be processed and paid in accordance with our regular payment schedule. Based on your account closure date of March 8, any final payments will be paid by May 31, 2010.
We have enjoyed working with you and other Colorado-based participants in the Amazon Associates Program, and wish you all the best in your future.
Best Regards, The Amazon Associates Team"
The intent of the law had to have been to create more revenue for Colorado, but what it did, in effect is close down thousands of income streams coming into Colorado by having Amazon.com stop allowing Colorado based affiliates to profit from their referrals. The major online retailers, instead of cooperating with the new law, have found a way around it. The thousands of affiliates who use the Internet to supplement their income - in effect - just got fired, through no fault of their own.
So, Colorado never gained the sales tax revenue and now has lost income tax revenue, because thousands of streams of income has been lost. The original intent of this new law may have been good for Colorado, but the reality of the situation is that this bill has cost Colorado thousands and thousands of dollars, damaged many small businesses, and failed the tax payers totally. More online retailers, such as Overstock.com have also threatened to eliminate Colorado based affiliates as well. This is going to have enormously terrible cascading effects on the Colorado economy.
It is a very sad day for entrepreneurs in Colorado.