Jeff Bezos Clarifies Amazon’s Stance on Affiliate Nexus Tax

Posted on7 CommentsCategoriesAffiliate / Advertising Tax

Earlier last week Amazon held its annual shareholder meeting in downtown Seattle. One of the questions that came up repeatedly was one that is of utmost importance to the affiliate marketing world — namely, the affiliate nexus tax, and Amazon’s stance on it. We know that every time a new state considers such a legislation Amazon either threatens to terminate, or terminates relationship with affiliates based in that state (as were the recent cases in Arkansas and Connecticut) right away.

Less than a month ago, when asked how I “think the tax legislation will play out”, I said:

I believe we’ll continue seeing new affiliate nexus bills proposed nationwide (most states still face bad budget shortfalls), affiliate marketers fighting for their jobs (winning some battles, and losing others), and only a carefully weighed federal solution can put a period in the sentence. [more here]

Here’s what Jeff Bezos had to say to the same point when speaking to Amazon’s shareholders:

The right solution to sales tax in my view, and certainly this is Amazon’s position and its been consistent and we’ve had this position for 10 years, is that the right place to solve this is federal legislation. …There is an initiative called the simplified sales tax initiative [my comment: more on it here]. 22 states have already signed on. That legislation needs to get passed. I believe that will happen in the time frame that you laid out. I hope it happens much sooner than that. I think it is the right thing to do and it would be great for Amazon. By the way, …keep in mind — in more than half of the geographies where we do business in certain states as well as Europe and Asia, altogether, more than half of our business is in jurisdictions where we already collect sales tax or its equivalent, like the value-added tax. Our position on this hasn’t changed. We think our position is a good one, and we will stick to that.

So, “Amazon …does at least half of its business in places where it collects sales taxes or something similar, such as Europe’s value-added tax” [source], and is happy to collect it in the U.S. as well, but only if there’s a proper federal legislation in place. While it breaks my heart every time thousands of affiliate marketers get kicked out of Amazon’s affiliate program, Bezos has an important point there. If an online sales tax should be collected, it should be collected in a uniform fashion, and not (a) in select states, or (b) from sales driven in by a select group of marketers (the way these bills and laws are currently structured makes only affiliate-referred sales taxable).

7 thoughts on “Jeff Bezos Clarifies Amazon’s Stance on Affiliate Nexus Tax

  1. “the way these bills and laws are currently structured makes only affiliate-referred sales taxable” Geno, this is not correct. If Amazon or any other retailer is deemed to have nexus in a state, they must collect taxes for all sales to consumers that reside in the state.

    1. Cathy, thank you for this. My original wording was indeed confusing. Of course, the principle of nexus is at the core. What I really meant to say was that in the majority of these bills/laws out of all online marketers that may be involved in promoting the merchant on the pre-sale phase only affiliate marketers are specifically deemed as basis for such a nexus.

  2. When there finally is a resolution to all of this, is it expected that the affiliate program will be reinstated nationwide?

    Also, any thoughts out there as to ways to circumvent the affiliation restrictions (i.e. living in the wrong state)?

    1. Hard to tell whether (or when) they will reinstate CA-based affiliates, or affiliates in other states that have the tax; but “nationwide”-wise: Amazon is still working with affiliates from many states, while some those who were based in states that do collect the tax decided to move to tax-free states.

      Also, yesterday morning Los Angeles Times published a relevant article on the subject: Amazon Cuts Deal on California Sales Tax (a must-read for everyone in affiliate marketing).

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