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Amazon Calls Minnesota Sales Tax Law Unconstitutional & Closes Minnesota Associate Accounts
The Minnesota Star Tribune reported today that Amazon is terminating all relationships with their Minnesota associates after the state’s Governor Mark Dayton signed the Minnesota E-Fairness legislation.
The new law classifies independent bloggers and online reviewers — which will include websites that post links to online merchant sites in exchange for advertising fees — as a physical presence of a business. The new legislation will force Amazon to collect taxes not only on any new sales generated by these websites, but on all sales in Minnesota.
“The tax on online sales is already due, but the onus has been on consumers, who often never pay the tax,” writes Star Tribune reporter Adam Belz, “The new law puts the onus on Amazon, as long as they have a single blogger posting links to its products from Minnesota.”
Signed May 23, the new legislation goes into effect on July 1, with Minnesota estimating it to generate $5 million in new revenue. Although, with Amazon and other e-commerce firms pulling their associate business ties with the state, that estimate may not pan out.
Amazon sent the following letter to associates, alerting them that their accounts will be closed effective June 30, stating specifically, “This is a direct result of the unconstitutional Minnesota state tax collection legislation passed by the state legislature and signed by Governor Dayton.”
This is not the first state where Amazon has cut ties, pulling out of California, North Carolina, Colorado, Connecticut, Arkansas, Illinois and Rhode Island because of similar tax legislation.
The Star Tribune article claims that online advertising network Commission Junction is also terminating its associate relationships within Minnesota.
Smaller, independent websites earning revenue from the links they post to merchant sites will suffer most from the new legislation and Amazon’s subsequent decision. Minnesota attorney Aaron Hall told The Star Tribune that some of these websites earn up to 6 percent commission on the sales they generate for online merchants like Amazon, “A lot of bloggers have been hit.”
(Image credit: SEO professional Nick LeRoy)