paidContent - Amazon Cuts More Affiliates To Avoid Sales Tax
This story was written by Joseph Tartakoff.
Amazon (NSDQ: AMZN) understandably doesn’t want to charge state sales taxes—and to avoid doing so, it’s cutting loose thousands of marketing affiliates who link to Amazon products on their sites in exchange for a cut of sales. (See examples of links to the left.) The company said Monday that it had terminated its affiliate program in Rhode Island, because a new law there would require companies to collect sales taxes if they have marketing affiliates based in the state, according to the WSJ. That follows a similar move by the company in North Carolina on Friday. Amazon is also fighting a third law in New York.
It’s likely that the cuts of affiliate programs will only accelerate, since several other cash-needy states, including Hawaii and Connecticut, are considering similar laws in order to raise funds. It’s unclear, though, how much revenue Amazon stands to lose, since the company doesn’t break out how much money it makes via the affiliate programs.
Citigroup Analyst Mark Mahaney says that even if Amazon can avoid collecting sales taxes in the short term, the “long-term trend will be towards state sales taxes.” Some consolation for Amazon, however: In markets where Amazon does collect sales taxes, the company has nevertheless seen consistent growth, Mahaney says.
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By Joseph Tartakoff