It’s surprising that in a state which is commonly voted the best place for business that North Carolina would impose affiliate tax on affiliate sales of $10K or more, because doesn’t this actually reduce the amount of companies who would want to do business in North Carolina, preferably those who run online businesses.
Amazon.com sent me a email message yesterday stating that they are terminating their Associate Program relationship with residents of North Carolina due to the newly imposed tax on affiliate sales. I’m glad I don’t make money from Amazon Associate Program or I’ll be in trouble. However, I am fearful that other affiliate programs will take the same approach and do away with North Carolina residents to thwart paying online affiliate sales taxes.
This law make things awkwardly difficult for Internet marketers and businesses to do online sales in North Carolina. I think NC is making a mistake as this imposed tax will potentially kill small businesses and those who make a living online.
Why is NC so greedy. I remember when the lottery came into the state it was meant to support the schools and education in North Carolina, it is even called the Education Lottery, however I haven’t seen much educational changes and schools are still struggling and begging for money while the current jackpot is $86,000,000 — nothing makes sense anymore! Someone is obviously fattening their pockets but the little guy always has to suffer for that to happen.
If you rely on affiliate sales then it may be time to move out of North Carolina, into a surrounding state, but I advise you follow other state laws, because I’m sure others will implement the same. Amazon has also ended its Associate Programs relationship with NY for the same reason, so I’d expect other states to jump on board with imposing affiliate sales tax.
Here is the letter I received from Amazon:
Important Notice from the Amazon Associates Program
We regret to inform you that the North Carolina state legislature (the General Assembly) appears ready to enact an unconstitutional tax collection scheme that would leave Amazon.com little choice but to end its relationships with North Carolina-based Associates. You are receiving this e-mail because our records indicate that you are an Amazon Associate and resident of North Carolina.
Please note that this is not an immediate termination notice and you are still a valued participant in the Associates Program. All referral fees earned on qualified traffic will continue to be paid as planned.
But because the new law is drafted to go into effect once enacted – which could happen in the next two weeks – we will have to terminate the participation of all North Carolina residents in the Amazon Associates program on or before that same day. After the termination day, we will no longer pay any referral fees for customers referred to Amazon.com or Endless.com nor will we accept new applications for the Associates program from North Carolina residents.
The unfortunate consequences of this legislation on North Carolina residents like you were explained in detail to key senators and representatives in Raleigh, including the leadership of the Senate, House, and both chambers’ finance committees. Other states, including Maryland, Minnesota, and Tennessee, considered nearly identical schemes, but rejected these proposals largely because of the adverse impact on their states’ residents.
The North Carolina General Assembly’s website is http://www.ncleg.net/, and additional information may be obtained from the Performance Marketing Alliance at http://www.performancemarketingalliance.com/.
We thank you for being part of the Amazon Associates program, and we will apprise you of the General Assembly’s action on this matter.