Amazon Calls Minnesota Sales Tax Law Unconstitutional & Closes Minnesota Associate Accounts

Amazon LogoThe 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.”

Amazon letter to Minnesota Associate

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)

Related Topics: Affiliate Marketing | Amazon | Channel: Industry | E-Commerce

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About The Author: is Third Door Media's General Assignment Correspondent, and reports on the latest news and updates for Marketing Land and Search Engine Land. From 2009 to 2012, she was an award-winning syndicated columnist for a number of daily newspapers from New York to Texas. With more than ten years of marketing management experience, she has contributed to a variety of traditional and online publications, including MarketingProfs.com, SoftwareCEO.com, and Sales and Marketing Management Magazine. Read more of Amy's articles.

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  • http://righteousmarketing.com robertbrady

    Typical government action. Short sighted and full of “unintended” negative consequences.

  • Sarah Konger

    Actually, I make 7.5% commission and $2,000 a month promoting Amazon products on my blog. I quit my job last year to do affiliate marketing full time. Now my income is gone. I don’t know what to do. I may have to leave the state. :(

  • Hostels

    People should blame Amazon, not the government:
    “According to a study commissioned by the National Conference of State
    Legislatures (which supports the bill), states lost out on roughly $11
    billion last year from out-of-state sales tax on online purchases.”

    http://marketingland.com/online-sales-tax-whyecommerce-companies-are-on-both-sides-of-the-debate-43395

  • Wendy Piersall

    Had they done the absolute basic level of homework, they would have known this was a BAD IDEA.

    Chicago Tribune: Amazon tax an Illinois disaster:
    http://illinoispolicy.org/blog/blog.asp?articlesource=5694

  • Hostels

    It would be better if all the states did it at once and forced Amazon to play by the same rules as local businesses. Amazon sucks money out of local economies and gives nothing back in local taxes. This probably has a significant negative effect on local
    economies, not just in the lost sales from small business owners, but
    from the lost taxes.

  • Wendy Piersall

    Amazon is lobbying for a national sales tax bill. It’s not that they don’t want to collect, they just want a way to do it on an even playing field.

  • NateOrshan

    Nice sound bite, but did you catch that Amazon is actually *backing* a Federal bill, the Marketplace Fairness Act, that would enable this kind of state-level tax collection (albeit only once a state has jumped through a few hoops; see http://marketingland.com/online-sales-tax-whyecommerce-companies-are-on-both-sides-of-the-debate-43395 )?

    What does Amazon know about government action that you don’t?

  • Hostels

    They surely don’t *want* to collect tax. I was under the impression that they want to build local distribution
    centers which means they have to pay local tax everywhere anyway. Ebay opposes the law, so one thing to look at is whether paying local taxes affects companies like Ebay. If there are 30 or 40 states where Ebay still doesn’t have to collect sales tax due to no physical presence, but Amazon does due to new distribution centers, then Amazon might want the law in order to make sure that Ebay isn’t cheaper in those other states. I’m just speculating on the reasons, but Amazon is not lobbying for a federal tax law out of concern for local economies.

  • Yonassan Gershom

    Yep, they closed my account — which I had had since the 1990s, and which was an important part of my income as a low-income senior,. So I’m taking down my “bookstore” website pages and removing all Amazon links on my blog — no point in sending them business for which I now receive nothing. So the endresult is, money that i was bringing into Minnesota (and would spend locally) has dried up. how doers that help our economy?

  • Man from Modesto

    Corporations are attempting to control our government every day- mostly with great and easy success. This particular strong arming is well known because so many of us received these emails. (btw, California caved and did not pass the law.)
    All the control over health care… it is about profits for BigPharm. There are now cures for more than half of all kinds of cancer. But, the FDA blacklists them because “they are not tested.” The FDA controls the testing, and they refuse to allow any testing for those cures.
    A cure would hurt profits of BigPharm.

    Look up Ted Burzynski and Tulio Simoncini.

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