I received an e-mail from Amazon about an update to their affiliate program. I don’t make a lot of money from there, but every couple of bucks helps. They noted that anyone from Louisiana is now excluded from the affiliate program, and I wanted to know why.
Let’s start off with a few warnings.
- Let’s try to keep this non-political.
- I am not a lawyer.
- I am not an accountant.
So please take this with a really big grain of salt.
Here’s an article detailing the “Amazon Law” that was put in place in Louisiana.
Amazon Laws don’t only affect Amazon sellers and affiliates. They also affect eBay sellers. These laws force online retailers to collect sales tax for all of the various tax districts around the country.
The argument for them is that the government is losing out on tax money because revenue is being taken out of local businesses’ hands.
The argument against them is that they put an unfair burden on online sellers. The tax laws are complicated and there are a huge amount of local tax laws that any small business could not be expected to maintain compliance with.
And then there’s Amazon, a huge company who actually has the resources to comply with the tax laws but chooses not to for their affiliate program. Amazon still sells to the states that have these laws, but if you move (or happened to reside in) the states which had the Amazon laws in place, then you are no longer allowed to participate in the program. These states are Arkansas, Louisiana, Maine, Missouri, Rhode Island, and Vermont.
Amazon Affiliate Process
Let’s go over the affiliate process.
I have links on my resources page to various products that I use in my eBay business. I love these and recommend them to readers. If someone is looking for a label printer, and they end up buying the item from Amazon using my link, I get a small commission. I’m
able to make a full-time salary just about able to cover the costs of the website with these referrals.
I have no control over where these items are coming from. Amazon handles all of that. Amazon has warehouses all across the U.S., and you can also buy items that are Merchant Fulfilled – shipped directly to you from an Amazon seller. This is how I sell on Amazon.
At this point in the process, there is a high probability that the item has never touched Louisiana soil unless it’s shipped from/to there. As an affiliate, I have no control over this. As a seller, if I ship something from my state to someone in my state, I do collect sales tax. Otherwise, I don’t worry about it.
If I lived in Louisiana, and I had been writing this blog, as of now, I wouldn’t be able to make any more commissions on it through Amazon links due to the change in the law. I’m sure lawmakers will say that it’s not their fault that Amazon has canceled the ability for anyone in Louisiana to be an affiliate, but that’s not true. There are consequences, and Louisiana wasn’t the first state to have a law like this affect affiliate income.
Imagine as a small seller having to send sales tax to all 50 different states. Taxes are already terrible. I can barely keep track of the sales within my own state, let alone every other state. As an affiliate, I literally have no ability to track where an item is sold. I just get a little $1 or $2 commission that says “this item sold.” That’s it. There’s nothing tying it to a specific buyer for privacy reasons.
The worst part for me is that I still pay my income tax at the end of the year. All of my affiliate income is tracked through GoDaddy Bookkeeping, and I just include it on the revenue line of my Schedule C.
So in the end, what’s the big deal? You have 6 states that are losing revenue for something that they basically get for free. Sure, local businesses with geographical restrictions are losing out on business, but that’s not because of the laws. People order from Amazon because it’s convenient. They don’t want to have to go to a local store that will charge similar prices when they can have it at their door in 2 days. People don’t buy things to fill a state’s tax coffer, and I think these one-off state laws forget this.
Is there any chance that these tax laws have more of an impact than just the Amazon Affiliate program? At what point does Amazon say “Louisiana’s tax laws impact us enough that we’re just not going to ship to that state.” It seems farfetched, but we just saw PayPal back out of a planned North Carolina facility due to a recent law that was enacted.
I have no idea what will happen in the end – maybe a national internet tax? All I hope is that it’s not complicated!
Image Credit: Alexandra Volker