Interview with Jen Goode on Colorado Internet Sales Tax

Posted on16 CommentsCategoriesAffiliate / Advertising Tax, Interviews

Today I have had a chance to interview Jen Goode, a Colorado-based affiliate marketer and business owner, to get her inside perspective on the Colorado Internet sales tax bill, Amazon’s termination of Colorado affiliate accounts, and other related questions.

Here is the interview:

GP: Once again, thank you for agreeing to be interviewed on the topic, Jen. I know how passionate you are about it, and I really appreciate you dedicating the time to this.

JG: Geno, thank you for the opportunity to share my perspective on this issue. Getting involved in fighting the Ad Tax in Colorado has definitely been a learning experience and whirl wind at that. Let me preface all this by saying I am by no means claiming to be an expert on this topic. I am not a political guru, nor do I know the exact thought processes or reasonings behind what Amazon or the legislators are doing — I am merely sharing my views as I see them.

GP: Jen, besides being a good friend, a talented artist, blogger, and a great affiliate marketer, you’ve been an active advocate for affiliate marketing in Colorado. Could you give us a quick overview of what has happened in Colorado as far as the so-called “Amazon tax” goes?

Colorado CapitolJG: I came home from a series of business trips in early February to hear that HB-1193, the Colorado Internet Tax bill, was on the table and being debated/discussed down at the capitol. It literally popped up overnight. Before I had returned home, there had already been a hearing in the House where there was a fantastic turn out of Colorado affiliates opposing the bill and testifying on behalf of the industry. The Colorado affiliate community began working together to contact legislators — sending letters, making calls and even visiting the House and Senate offices to speak to legislators in person. The bill then moved to the Senate Finance Committee where again the troops were rallied to show support and testify. At this point, with the help of countless people, the legislators and affiliates had worked together to drastically change the language of HB-1193 so that the affiliates were removed all together. The state government knew they would be passing the bill regardless — so the primary goal was to help protect the residents of Colorado, the Affiliates. The bill then moved on to the Senate floor — and again it passed. The bill traveled back to the House for a final vote and then on to the Governor for his signature.

The State officials were satisfied that the bill no longer endangered the livelihoods of the affiliates and the affiliates were happier that they were no longer a direct piece of the bill’s language — although many were relieved, I believe the affiliate community was still in a “wait and see” mode. The fact there was a bill at all that passed, we’d never crossed this bridge before so we didn’t know where it would lead.

GP: Monday morning (8 March, 2010) all Colorado-based affiliates were terminated from Amazon.com’s affiliate program. I’ve seen you say you’re “very tired of all the ignorant comments by press and opposition that Amazon is holding CO affiliates hostage or using CO affiliates”. What exactly is your take on all of this? What is Amazon doing, and what should Colorado affiliates do now?

JG: First I have to say that statement was made because I am tired of the media sensationalizing the story� against the “big bad Amazon”. Media focuses on Amazon instead of the taxI realize the media is being media, but it’s irritating. Yesterday I had the chance to speak with the Denver Post — the reporter didn’t particularly like that I was not simply agreeing with him about evil Amazon. I’m not mentioned in any of the stories the Post published today (grin). The media is reporting from very biased angles, sharing information yet not understanding the industry. When we cried for media help during the bill debates and hearings, they weren’t interested. But now that there is a big corporate America guy appearing to avoid paying taxes, it’s all over the news.

I’m also tired of legislators again pointing the finger at Amazon as being greedy and bullying. Over and over we’ve heard that “it’s just not fair” to our local businesses. In the business world, sales tax is not the biggest obstacle to becoming competitive. I don’t want to come across as disrespectful. I sympathize with the local business owners struggling to keep up with internet retailers. I can relate — I am a local business owner — I even sell in brick and mortar retail shops. But sales tax is not the differentiator and definitely not when it’s handled on a state by state case.

I feel that Amazon is purely working on their own agenda — which to many can be construed as bulldozing over everyone else. I don’t like the tactic and I am not happy that I can no longer promote Amazon products, mainly because it’s a brand everyone knows and trusts and the prices are fantastic… So from a business perspective, it’s a great merchant to work with. But Amazon has bigger issues than just Colorado’s take on Sale Tax or Use Tax or any Internet related legislation. Amazon is in a batter across the country. I don’t know the logistics and I don’t know the details. I am just looking at it from a very speculative business view — a federal tax would better serve the cause.

Penguins against Ad TaxI had the opportunity to speak with Senator Johnston for a few minutes yesterday — he is one of our opposition. Right now those who like this bill are claiming that Amazon “simply doesn’t want to pay sales tax and is holding affiliates hostage to avoid paying taxes”. I believe this is simply not true. His argument was that Amazon is already dealing with taxes for Target. I believe the technical tax aspect for Amazon is much more complicated and involved than any of the legislators comprehend. I wish Amazon could explain it more clearly and obviously than the big bully actions they have to take. I asked Senator Johnston if he had spoken with Amazon about their view of paying sales tax and if he has asked them if they would pay a sales tax if it were a nationwide/federal mandated tax vs individual state taxes. He said “no” but did say he would contact them. Let follow up on that in a few weeks.

Right now those on our side understand the pain and the need to fix the problem, they are in the minority, their hands are tied. Those against us (even when claiming they are for us) are simply putting the blame on Amazon and won’t budge. They are claiming they are fighting for the little guy. So there isn’t much we can do in the way of expecting the law to change. We won’t be heard and we’re only be fueling the fire that Amazon is bad. The more we show how much we’ve lost or the impact because of Amazon, the worse Amazon looks and the more they want Amazon to pay.

What affiliates can doWhat I think we can do, however, is let those legislators on our “team” know that we are here if they need us. Ask them how we can help. Currently the Republicans are on our side. I think a few Democrats might be as well, but Colorado is too partisan right now to really tell. But more importantly take care of our businesses and families first. Don’t wait for the government to fix the problem, be proactive and work on a solution for your own situation. If you are looking for replacement merchants and want to be extra protected, there is a new service provided by GTO Management that allows you to search for merchants based on their involvement in state tax or nexus status called Nexus Aware.

I also recommend — with any business — diversify. It’s important not to put all your eggs in one single basket (to be a bit cliche) without a plan “just in case”. If you build your business entirely around one merchant, you’re leaving yourself vulnerable to issues out of your control. Not a good idea.

Some other things affiliates can do to help:

  • Educate your merchants. Let them know that the Colorado internet tax does not apply to affiliates nor nexus.
  • Get to know your legislators so you can educate them on the way this industry works, most really have no comprehension of the enormity of this industry let alone how it all works.
  • Build relationships within the industry so that when issues like this arise, you’re not alone trying to figure out what to do next.

GP: What do you recommend online merchants do in connection with the ever-growing number of states considering similar, or most of the time more affiliate-focused tax laws?

JG: This is a tricky question. I am not very versed in legal terms and definitely not in the position to give business nor legal advice. However, I think it is extremely important that merchants really understand these laws and how they will impact their businesses. Prior to Amazon’s termination I received notice that I was not longer eligible in two other programs… Just because I am in Colorado. Merchants need to not simply hear “ad tax passed” and have a knee-jerk reaction. In the case of Colorado, affiliates or nt, the bill applies to all online merchants — so dumping affiliates does no good. Amazon is acting out of of a bigger cause than simply affiliate nexus issues.

GP: Thank you, Jen. I certainly echo most of what you have said above. Once again, thank you for your time.

Once again, thank you for your interest in the interview. Please feel free to be make your replies as concise or as detailed as you wish, and please let me also know how you want me to introduce you (including any links).

Here are my 5 questions:

Geno, thank you for the opportunity to share my perspective on this issue. Getting involved in fighting the Ad Tax in Colorado has definitely been a learning experience and whirl wind at that. Let me preface all this by saying I am by no means claiming to be an expert on this topic. I am not a politic guru nor do I know the exact thought processes or reasonings behind what Amazon or the legislators are doing � I am merely sharing my views as I see them.

I came home from a series of business trips in early February to hear that HB-1193, the Colorado Internet Tax bill, was on the table and being debated/discussed down at the captial. It literally popped up overnight. Before I had returned home, there had already been a hearing in the House where there was a fantastic turn out of Colorado affiliates opposing the bill and testifying on behalf of the industry. The Colorado affiliates community began working together to contact legislators � sending letters, making calls and even visiting the House and Senate offices to speak to legislators in person. The bill then moved to the Senate Finance Committee where again the troops were rallied to show support and testify. At this point, with the help of countless people, the legislators and affiliates had worked together to drastically change the language of HB-1193 so that the affiliates were removed all together. The state government knew they would be passing the bill regardless � so the primary goal was to help protect the residents of Colorado, the Affiliates. The bill then moved on to the Senate floor � and again it passed. The bill traveled back to the House for a final vote and then on to the Governor for his signature.

The State officials were satisfied that the bill no longer endangered the livelihoods of the affiliates and the affiliates were happier that they were no longer a direct piece of the bill�s language � although many were relieved, I believe the affiliate community was still in a �wait and see� mode. The fact there was a bill at all that passed, we�d never crossed this bridge before so we didn�t know where it would lead.

Then Monday morning (March 8th, 2010), Amazon terminated all of the Colorado affiliates. The exact reasoning, I don�t know. I can speculate that it�s not personal, it�s not Amazon against Colorado � it�s Amazon against state mandated sales tax laws.

2) Two days ago Colorado-based affiliates were terminated from Amazon.com’s affiliate program <https://www.amnavigator.com/blog/2010/03/08/does-terminating-colorado-affiliates-resolve-the-issue/> . I’ve seen you say you’re “very tired of all the ignorant comments by press and opposition that Amazon is holding CO affiliates hostage or using CO affiliates”. What exactly is your take on all of this? What is Amazon doing, and what should Colorado affiliates do now?

—————— this might be a completely different question � sorry to ramble ———————–
First I have to say that statement was made because I am tired of the media sensationalizing the story against the �big bad Amazon�. I realize the media is being media, but it�s irritating. Yesterday I had the chance to speak with the Denver Post � the reporter didn�t particularly like that I was not simply agreeing with him about evil Amazon. I�m not mentioned in any of the stories the Post published today (grin). The media is reporting from very biased angles, sharing information yet not understanding the industry. When we cried for media help during the bill debates and hearings, they weren�t interested. But now that there is a big corporate America guy appearing to avoid paying taxes, it�s all over the news.

I�m also tired of legislators again pointing the finger at Amazon as being greedy and bullying. Over and over we�ve heard that �it�s just not fair� to our local businesses. In the business world, sales tax is not the biggest obstacle to becoming competitive. I don�t want to come across as disrespectful. I sympathize with the local business owners struggling to keep up with internet retailers. I can relate � I am a local business owner � I even sell in brick and mortar retail shops. But sales tax is not the differentiator and definitely not when it�s handled on a state by state case.
————————————————

I feel that Amazon is purely working on their own agenda � which to many can be construed as bulldozing over everyone else. I don�t like the tactic and I am not happy that I can no longer promote Amazon products, mainly because it�s a brand everyone knows and trusts and the prices are fantastic… So from a business perspective, it�s a great merchant to work with. But Amazon has bigger issues than just Colorado�s take on sale tax or Use tax or any internet related legislation. Amazon is in a batter across the country. I don�t know the logistics and I don�t know the details. I am just looking at it from a very speculative business view � a federal tax would better serve the cause.

I had the opportunity to speak with Senator Johnston for a few minutes yesterday � he is one of our opposition. Right now those who like this bill are claiming that Amazon �simply doesn�t want to pay sales tax and is holding affiliates hostage to avoid paying taxes�. I believe this is simply not true. His argument was that Amazon is already dealing with taxes for Target. I believe the technical tax aspect for Amazon is much more complicated and involved than any of the legislators comprehend. I wish Amazon could explain it more clearly and obviously than the big bully actions they have to take. I asked Senator Johnston if he had spoken with Amazon about their view of paying sales tax and if he has asked them if they would pay a sales tax if it were a nationwide/federal mandated tax vs individual state taxes. He said �no� but did say he would contact them. Let follow up on that in a few weeks.

Right now those on our side understand the pain and the need to fix the problem, they are in the minority, their hands are tied. Those against us (even when claiming they are for us) are simply putting the blame on Amazon and won�t budge. They are claiming they are fighting for the little guy. So there isn�t much we can do in the way of expecting the law to change. We won�t be heard and we�re only be fueling the fire that Amazon is bad. The more we show how much we�ve lost or the impact because of Amazon, the worse Amazon looks and the more they want Amazon to pay.

What I think we can do, however, is let those legislators on our �team� know that we are here if they need us. Ask them how we can help. Currently the Republicans are on our side. I think a few Democrats might be as well, but Colorado is too partisan right now to really tell. But more importantly take care of our businesses and families first. Don�t wait for the government to fix the problem, be proactive and work on a solution for your own situation. If you are looking for replacement merchants and want to be extra protected, there is a new service provided by GTO Management that allows you to search for merchants based on their involvement in state tax or nexus status called Nexus Aware (http://www.nexusaware.com).

I also recommend � with any business � diversify. It�s important not to put all your eggs in one single basket (to be a bit clich�) without a plan �just in case�. If you build your business entirely around one merchant, you�re leaving yourself vulnerable to issues out of your control. Not a good idea.

Some other things affiliates can do to help:

  • Educate your merchants. Let them know that the Colorado internet tax does not apply to affiliates nor nexus.
  • Get to know your legislators so you can educate them on the way this industry works, most really have no comprehension of the enormity of this industry let alone how it all works.
  • Build relationships within the industry so that when issues like this arise, you�re not alone trying to figure out what to do next.

3) What do you recommend online merchants do in connection with the ever-growing number of states considering similar, or most of the time more affiliate-focused tax laws?

This is a tricky question. I am not very versed in legal terms and definitely not in the position to give business nor legal advice. However, I think it is extremely important that merchants really understand these laws and how they will impact their businesses. Prior to Amazon�s termination I received notice that I was not longer eligible in two other programs… Just because I am in Colorado. Merchants need to not simply hear �ad tax passed� and have a knee-jerk reaction. In the case of Colorado, affiliates or nt, the bill applies to all online merchants � so dumping affiliates does no good. Amazon is acting out of of a bigger cause than simply affiliate nexus issues.

Once again, thanks in advance, and looking forward to your reply, my friend.

16 thoughts on “Interview with Jen Goode on Colorado Internet Sales Tax

  1. Geno what an outstanding interview. And thanks to Jen s well.

    Last night several channels were talking that things are bad in Washington (and elsewhere) because politicians are representing to many constituents. Of course the solution to that is to elect more politicians to represent us :). I think they mentioned that there should be about 10,000 house and senate representatives to adequately represent Americans. Can anyone imagine that?!

    I am still surprised NJ politicians have not figured that they can balance the budget shortfall by taxing affiliates. But it’s the matter of time, I am sure.

  2. Vlad, thank you for your comment and tweeting about this interview. Yes, I think Jen has done a great job explaining things in layman terms and a very clear, sincere, and passionate manner.

    I know it’s a challenging task, but I want to keep things as politics-free as possible (hence, my moderate editing of your comment to keep direct attacks out of it). I don’t believe accusations will help anyone much. We want to be logical and practically-minded when taking about issues like these. It’s not the tax itself that is the problem, but rather the way its being applied (in most states — to affiliates only; in this case — selectively to residents of one state), and the consequences it frequently brings about (affiliate terminations based on the state of residence). This, in its turn, hurts businesses; and hurts the economy (the is never a good time for the latter, but now is certainly not the right time at all).

  3. Yes, you right I went over the top since there are many wonderful people in NJ politics. I also had no intention to disrespect you nor your readers.

    I do however think that taking politics out of this issue will be quiet impossible. We do after all elect our leaders here and as a part of this process it should be our right to let them know once in a while that we have voted for them.

    Don’t we have right to question them why do they thing it is necessary to implement such laws? As I understand, and please correct me if I am wrong, in all the states involved so far this Internet tax was a part of larger attempt to patch holes in the budget. These budget shortfalls did not happened overnight. Did the “politics” had anything to do with it?

    Again, I have no intention whatsoever to offend anyone.

  4. Vlad, thank you for your understanding.

    You are right. It is impossible to take politics out of this, but we as an industry understand frequently the problem lays in the lack of understanding how the affiliate marketing industry functions (some think of the very term “affiliate” in ways very different from what it actually means in our context). So, what Colorado affiliates did is exactly what I think affiliates in every state should do. Legislators are generally very open to hearing affiliates out (when affiliates do initiate meetings with them, and go to hearings), and this is encouraging.

    What constitutes a bigger problem, in my opinion, is that some merchants turn out to be considerably less understanding than legislators.

  5. I am a Colorado jewelry designer with two “bricks & mortar” stores in Aspen & Carbondale, as well as a popular online store. I have been hearing very conflicting information on this new bill, and after calling my local sales tax offices (no info there) to phone-hell with Colorado Treasury Sales Tax division (they are not fielding questions due to “overwhelming call volume”). I also read the text of the bill online, and scoured all sources I could find…I am still in the dark as how/if this will affect my business. From what I can tell, this new bill mainly deals with items sold from “out of or within colorado” and being shipped into Colorado only- they would now be subject to 2.9% state tax. However, my question is if I am expected to collect sales tax on all instore & online sales shipped OUT of Colorado- this is what several people that I have talked to believe to be the case. Is this true? I already collect and report all sales within Colorado, but am I now supposed to collect Colorado sales tax for all items that will be shipped OUT of Colorado too? I would appreciate any clarification as I can’t find it elswhere.

  6. Scott, thank you for your question. Yes, there is a lot of different information out there on this bill, and while I am not a lawyer or a tax consultant, from the text of the bill it doesn’t look like the online sales shipped out of Colorado (or sold for use by persons residing outside of Colorado) are affected. It seems to be explicitly focused on sales to “persons residing in this state for use, consumption, distribution, and storage for use or consumption in this state.”

    Again, don’t take this as a legal or accounting advice, and talk to your lawyer or accountant to be 100% clear. But it doesn’t seem like out-of-state sales are in any way affected by this new legislation.

  7. Scott, (I am not a lawyer or accountant so this is not to be considered counsel.) I have a link that may help clarify but first a general comment/explanation.

    As you probably know, Colorado, like most states has what is actually called a “sales and use tax”. Every time someone buys something they owe this tax. If the merchant collects the sales tax at the time of purchase and remits it to the Revenue department it is a sales tax. If a merchant does not collect it, the “buyer” still owes it and is required to pay it direct to Revenue department; and it is then called a use tax.

    The new law in Colorado seeks to improve the collection of the “Colorado use tax”. It wants to improve the collecting of the sales and use tax on purchase by a “Colorado purchaser” from a “retailer that does not collect Colorado sales tax”. Colorado use tax is only due on items brought into Colorado, not items shipped out of Colorado.

    I assume you are already in compliance for sales you currently make in Colorado and to Colorado resident. This law is directed at “Retailers that do not collect Colorado sales tax” which are usually out of state merchants. New law does not affect a Colorado business that already collects the Colorado sales tax.

    This link to the Colorado Emergency Regulations to Clarify HB1193 should be helpful.

    As Geno also mentioned, since we are not lawyers or accountants, run everything by your accountant or lawyer.

  8. Very nice interview. Jen worked very hard in Colorado and I am glad a real affiliate had a chance to be heard at the hearing.

    Jen, I have had similar experience with the media regarding this issue. As soon as reporters heard I was not against any merchant who terminated they would try and argue with me.

    Skewing the news to suit their needs or opinions by only printing “like voices” is not getting the real story out. It is also adding to the “anti” Amazon stance some legislators have.

  9. Yes, I really appreciate Jen’s time, and effort working on things in Colorado too.

    It is sad to hear how mis-focused media really is. Scandal is all they are after, regardless of how non-yellow this or that channel may want to appear on the surface.

  10. “These budget shortfalls did not happened overnight.”

    No, they didn’t. They’ve been building for the past decade as more and more dollars are spent online rather than in local businesses. Every year, we as an industry brag about how much more money is being spent online, but we never consider what that means for state budgets. We need a viable online sales tax plan – but the idea that affiliates can be used to do an end-run around existing laws to make it happen sickens me. The politicians aren’t the bad guys. Amazon isn’t the bad guy. Affiliates certainly aren’t the bad guys. There are no bad guys here, only people that are trying to make the best they can of a horrible situation with the information they have.

    Kansas City, MO is closing 29 schools, nearly half in the district, due to budget shortfalls. Areas of Colorado are going to similar extremes, as are areas in other states.

    It’s easy to think of politicians as evil, especially when it’s your livelihood that they’re messing with, and especially when they’re not of the party that you identify yourself with (if I had a nickel for every slam against “the Democrats” lately…). But they’re human beings. Most of them want nothing more than to do the right thing. They’re wrong about using affiliates in this way, and thanks to people like Jen, they took the affiliate language out of the bill. They were willing to do the right thing. It’s a start.

  11. Excellent summary, Daniel. That’s the approach we should all take, helping them to make educated decisions, and not pointing fingers.

    On a separate note, it is still sad that media is way too yellow when we (or actually, the broader community) really need a sober analysis instead.

  12. My name is Jack Minor. I am a reporter for the Greeley Gazette, a new, local newspaper in Greeley.

    I am looking for those who have been affected by this bill living in the Greeley/Evans area for an article I am doing regarding this tax.

    If you are an affiliate, I would like to hear from you regardless of your thoughts towards the merchant that terminated your account.

    I can be contacted at jackminor@comcast.net or call me at 970-302-3470.

    Thanks,

    Jack Minor

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